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Demand overproduction - Mahmoud - 28-06-2021

Hello everyone,  I am in a situation where I am probably missing something. I've updated 2020 demands in the JRC-EU-TIMES model (please see the first attaeched file). The demand level of the commodity INM is 51 PJ in 2020. I ran the model using these demand levels, without allowing elastisities. The weird result is that demand production of INM is about 90 PJ in 2020.  As far as I can tell, demand overproduction could happen when there are some constraints that can not be met otherwise. I am unable of identifying such in my situation.  Am I missinterpreting the results here?  Thank you very much for your help,  Mahmoud

RE: Demand overproduction - Mahmoud - 29-06-2021

I managed to solve this issue. It turned out I was activating taxes on the overproduction of commodities of type NRG and deactivating those on commodities of type DEM...

RE: Demand overproduction - Antti-L - 29-06-2021

I am curious about these "taxes on the overproduction" for demands, which you have mentioned earlier.  I don't quite understand why you need to use such taxes.  If an energy service demand has any value, it will not be produced any more than the demand, and so a tax on overproduction would never be needed.  A demand produced despite being of no value would be like waste. Besides, as I mentioned earlier, if you are going to use elastic demands, your demand prices should be well-behaving.  If you have overproduction, your demand prices would normally be zero (or even negative it you define taxes on overproduction).  So, what is the idea behind using such taxes?  Don't you think that all demands should have a value, which would automatically prevent overproduction?

RE: Demand overproduction - Mahmoud - 29-06-2021

I 100% agree with the fact that the use of elastic demands requires well-behaving prices (without taxes to avoid negative reference prices). In this version, I am not using elastic demands. When I run the model without any taxes, some commodities (high temperature heat in particular) get overproduced in the non-metal industry. To be honest, I did not push so far to grasp this. So, I can not tell why such behaviour takes place. It might be because of the complex modelling of different industrial sectors... to be verified. To avoid the overproduction of high temperature heat, I ran another scenario with tax on its overproduction and it is in this case that I get overproduction of demand in the same sector. I guess that I am having some rigid input/output flows in some processes or some by-products that are produced without any demand. I am still investigating...