The Department of Energy & Climate Change (DECC) published today a consultation paper and impact assessment on the UK’s Compulsory Stockholding Obligation (CSO) arrangements. IPA and Muse, Stancil & Co. were commissioned by DECC to produce an independent report assessing the level of the CSO arrangements that needed to be imposed on refiners and importers to ensure the UK continued to meet its international oil stocking obligations.
To undertake the assessment IPA developed a bespoke model of the UK’s oil consumption, production and imports up to 2030, to forecast future stockholding requirements. The model was also designed to calculate the necessary individual obligations on market participants in order to meet the national aggregate obligation over the period to 2030, and assess the cost of meeting the obligation under different UK continental shelf production, declining refinery throughput and CSO policy sensitivities.
IPA drafted an independent report for DECC which: (i) determined the ability of the current level of individual CSOs on market participants to meet national stockholding obligations up to 2030; (ii) assessed whether individual CSOs should be changed as a result of changing market and operating conditions; (iii) summarised views of the trade associations on the current stockholding arrangements and the industry’s approach to meeting any changes to stockholding differential and obligation; and (iv) provided policy recommendations on what least cost obligations should be imposed on market participants to ensure that the UK is compliant with its international obligations.
IPA offers specialist skills in energy sector policy development and evaluation. IPA’s specialist modelling skills and simulation tools, complemented by our energy industry expertise, allows us to objectively analyse the impacts of changing policy on market participants, consumers and the environment. For further information on how we could potentially assist you, please contact Jonathan Thurlwell, Managing Principal – Regulation & Policy on 020 7659 9888.