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1、AEMO Commodities Scenario Forecasts FY2023 AEMO COMMODITIES SCENARIO FORECASTS 2022-23:REPORT PREPARED FOR THE AUSTRALIAN ENERGY MARKET OPERATOR FINAL 9TH SEPTEMBER 2022 AEMO Commodities Scenario Forecasts FY2023 1 09 September 2022 All data shown in tables and charts are BIS Oxford Economics own da
2、ta,except where otherwise stated and cited in footnotes,and are copyright BIS Oxford Economics Pty Ltd.This report is produced for the Australian Energy Market Operator as input into their suite of energy forecasting reports.This report is not to be relied upon for any other purposes.The modelling a
3、nd results presented here are based on information provided by third parties,upon which BIS Oxford Economics has relied in producing its report and forecasts in good faith.Any subsequent revision or update of those data will affect the assessments and projections shown.To discuss the report further
4、please contact:Ruchira Ray:.au BIS Oxford Economics Pty Ltd Level 6,7 Macquarie Place,Sydney,2000,NSW Tel:+61 2 8458 4200 AEMO Commodities Scenario Forecasts FY2023 2 TABLE OF CONTENTS Executive Summary.3 1.Introduction.7 2.Key economic and climate Assumptions.8 2.1 Near Term Assumptions.8 3.Commodi
5、ties price Forecasts:Step Change.10 3.1 Brent Crude Oil Price Forecasts.10 3.2 Newcastle Thermal Coal Price Forecasts.11 3.3 LNG netback prices Wallumbilla.11 4.Commodities Price Forecasts:Alternative scenarios.13 4.1 Brent Crude Oil Price Forecasts.13 4.2 Newcastle Thermal Coal Price Forecasts.14 4
6、.3 LNG Netback Price(Wallumbilla)Forecasts.14 Appendix A:Oxford Economics GEM Model Forecasts.16 Appendix B:Foreign Exchange Rates.19 Appendix C:Estimating Newcastle Thermal Coal and LNG Netback Price.20 Appendix D:Benchmarking.22 Short-Term Forecast Benchmarking.22 Long-Term Forecast Benchmarking.2
7、8 AEMO Commodities Scenario Forecasts FY2023 3 EXECUTIVE SUMMARY This report presents the commodity price outlook for the four alternative scenarios outlined in the Australian Energy Market Operators(AEMO)Input Assumptions and Scenarios Report(IASR)Step Change case,Progressive Change case,Exploring
8、Alternatives case and the Hydrogen Export case.The forecasts presented are for the following commodities:1.Brent Crude Oil(AUD/bl)2.LNG Netback Price(Wallumbilla)(AUD/GJ)3.Newcastle Thermal Coal Price(AUD/tonne)Step Change Scenario The Step Change scenario forms AEMOs most likely scenario pathway.It
9、 is characterised by moderate macroeconomic growth drivers.Additionally,in the long-run there are coordinated global policy efforts to mitigate carbon emissions.This places the world on a climate warming pathway of 1.8C by 2100(RCP 2.6).The near-term outlook for these commodities is largely dictated
10、 by current market developments.Global policy commitments to decarbonisation becomes a stronger driver in the long-term as it determines the pace of structural shift in demand away from emissions intensive fossil fuels.Near Term Outlook Energy commodity prices have experienced a sharp appreciation i
11、n recent months.Key themes affecting these markets are the Russia-Ukraine conflict,supply chain pressures,government policy,and further COVID-19 disruptions.We expect these factors to continue to influence the near-term outlook.Prices are generally expected to peak across all commodities by the end
12、of this quarter(Sep-22),before starting to fall back as supply side pressures ease.In particular,we assume that a long military conflict is avoided in Ukraine and that supply chain bottlenecks unwind through the rest of this year.On the demand side,we expect some of the strength seen in recent month
13、s to subside in response to monetary policy tightening and ongoing inflation.Nevertheless,upside risks to the outlook remain,which are considered in the alternate scenario outlooks.Commodity Price Forecasts:Step Change(June 2022-2026)Jun-22Jun-23Jun-24Jun-25Jun-26Brent Oil Price(AUD/bl)21
14、00LNG Netback Price(AUD/GJ)3734201515Newcastle Thermal Coal Price(AUD/tonne)482329145111110 AEMO Commodities Scenario Forecasts FY2023 4 Long Term Outlook The long term forecast is influenced by a policy induced decline in demand as the world decarbonises.As demand progressively falls away,suppliers
15、 exit the market in merit order from highest cost producer to lowest cost.This is reflected by a fall back in commodity prices.Across the commodities,thermal coal(being the dirtiest of emitters)is the most heavily penalised by the worlds decarbonisation efforts.Demand for coal is the fastest to fall
16、 away,followed by oil and then LNG,which acts as a transition fuel in the medium term.This is reflected in the long-term profile for these commodities.Fig.1.Long-Run Outlook for Newcastle Thermal Coal Price and Brent Crude Oil Price,Nominal Source:BIS Oxford Economics/Renewable Energy Quarterly/Have
17、r Analytics Fig.2.Long-Run Outlook for LNG Netback Price(Wallumbilla),Nominal Source:BIS Oxford Economics/Renewable Energy Quarterly/Haver Analytics AEMO Commodities Scenario Forecasts FY2023 5 Alternative Scenarios In addition to the Step Change scenario,this report considers three other alternativ
18、e cases Progressive Change,Exploring Alternatives and Hydrogen Export.Each of these represents alternative energy transition pathways.For each case the following overarching settings are assumed:Progressive Change:this is a slow economic growth scenario,with weaker population and productivity growth
19、 in the long run.There is less global policy coordination and global action is insufficient to achieve net zero emissions.As a result,the world is on a path to 2.6C warming by 2100(RCP 4.5)from pre-industrial levels.Exploring Alternatives:similar to the Step Change scenario,global policy intention i
20、s well aligned in this scenario.However,some countries take longer to fulfil their policy commitments.As a result,climate warming reaches 2.0C by 2100(RCP 3.5).Hydrogen Export:This is a higher growth pathway to the Step Change scenario,with stronger population and productivity growth in the long run
21、.Both Australia and its global counterparts aggressively pursue net zero emissions,limiting global warming to 1.5C by 2100(RCP 1.9).Additionally,Australia focusses investment in development of its hydrogen export sector,becoming a leader in hydrogen exports globally.Near Term Outlook There is consid
22、erable risk surrounding the economic environment in the near term.Uncertainty remains around the length of conflict in Ukraine;pace of monetary tightening and demand response.Other risks also include the possibility of a COVID outbreak leading China to reinstate strict lockdowns,triggering another r
23、ound of supply chain disruptions.On the flip side,an earlier abatement of these headwinds could lead to faster corrections in price.That said,we believe the risks are weighted to the upside for commodity prices.With this in mind,we model the following near-term upside and downside risks to the outlo
24、ok:In the Progressive Change scenario war proves more protracted and energy market disruption more severe than in our baseline forecast.With the Russian energy supplies to Europe severely curtailed,oil,gas,and consequently thermal coal prices soar.Against a backdrop of persistently elevated inflatio
25、n,households inflation expectations rise and confidence worsens.Central banks around the world(US,ECB)pursue more aggressive monetary tightening to curb inflation.Policy is tighter than Step Change by the latter half of the scenario.The Hydrogen Export scenario is characterised by an early end to th
26、e conflict in Ukraine,diminishing energy market disruption and fading coronavirus concerns.With confidence improving,the result is a sharp consumer led global economic recovery,supported by the run down of a large proportion of the substantial household savings accumulated at the height of the crisi
27、s.The Exploring Alternatives scenario assumes the same near-term economic environment as the Step Change case.As a result,in the Progressive Change case we see even stronger price growth that take longer to correct,relative to the Step Change.By contrast,the Hydrogen Export scenario has a faster pac
28、e of correction in the near-term.This is in part exacerbated by early and stronger climate policy action,making fossil fuels less attractive.AEMO Commodities Scenario Forecasts FY2023 6 Long Term Outcome In the long-term,in line with their policy narratives,the Hydrogen Export scenario sees the fast
29、est fall back in commodity prices.By contrast,prices remain flat or growing in the Progressive Change scenario(in nominal terms).The shift away from fossil fuels is delayed in the Exploring Alternatives scenario,leaving prices higher than Step Change by the end of the forecast horizon.Across scenari
30、os,thermal coal is the most affected by climate policy,followed by oil and then LNG.In the Hydrogen Exports scenario,the drop in all three fossil fuel sources is the most rapid,owing to the strong policy action.LNG plays a much smaller role as a transition fuel.The reverse is true in Progressive Cha
31、nge.There is still some policy action in Progressive Change,which limits growth for Coal(the price outlook is flat in nominal terms)but demand remains solid for oil and gas as users substitute from coal to these sources of fuel.As a result,the nominal price of oil and gas continues to grow in the lo
32、ng-run.Jun-22Jun-23Jun-24Jun-25Jun-26Jun-30Jun-54Exploring AlternativesBrent Oil Price0%0%0%0%0%0%15%LNG Netback Price0%1%0%0%0%0%14%Newcastle Thermal Coal Price0%-3%-4%-1%0%0%9%Progressive ChangeBrent Oil Price-3%-10%19%13%6%7%63%LNG Netback Price0%73%95%35%21%16%75%Newcastle Thermal Coal Price-3%3
33、6%80%28%7%7%301%Hydrogen ExportBrent Oil Price-3%-19%-22%-26%-31%-39%-24%LNG Netback Price0%-23%-25%-27%-31%-38%-22%Newcastle Thermal Coal Price-3%-4%-1%-17%-38%-60%4%Commodity Price Forecasts:Alternative Scenarios(%difference from Step Change)AEMO Commodities Scenario Forecasts FY2023 7 1.INTRODUCT
34、ION BIS Oxford Economics was engaged by the Australian Energy Market Operator(AEMO)to produce commodity price scenario forecasts to supplement the economic projections used in their 2022-23 suite of energy outlook reports.AEMO delivers a range of planning and forecasting publications to inform decis
35、ion making including the Electricity Statement of Opportunities(ESOO),the Gas Statement of Opportunities(GSOO)and the Integrated System Plan(ISP).The economic forecasts provided in this report are inputs into AEMOs modelling and forecasting processes.The commodity price projections are developed for
36、 scenarios provided by AEMO in their Inputs,Assumptions and Scenarios Report(IASR)1.The scenario narratives that underpin the commodity price forecasts have been developed in consultation with AEMO.The forecasts across scenarios are also consistent with the economic projections produced for AEMO.The
37、 commodity price forecasts have been developed using BIS Oxford Economics proprietary Global Economic Model to ensure consistency between global commodity prices and the country level economic outcomes.For more details on the macroeconomic models,please see Appendix B.This report supplements the com
38、modity price forecasts produced for AEMO.The report has been structured as follows:Chapter 2:Outlines the key scenario narratives,including near term assumptions Chapters 3:Presents the Step Change scenario forecasts Chapters 4:Presents the alternative scenario forecasts Appendix A:Details BIS Oxfor
39、d Economics proprietary global,industry and state models.Appendix B:Outlines the foreign exchange rate assumptions and methodology.Appendix C:Details BIS Oxford Economics methodology for producing Wallumbilla LNG Netback price forecasts and Newcastle Thermal Coal price forecasts.Appendix D:Provides
40、a comparison of the commodity forecasts to alternative sources 1 https:/.au/en/energy-systems/major-publications/integrated-system-plan-isp/2022-integrated-system-plan-isp/current-inputs-assumptions-and-scenarios AEMO Commodities Scenario Forecasts FY2023 8 2.KEY ECONOMIC AND CLIMATE ASSUMPTIONS Thi
41、s section outlines the key assumptions and near-term narrative supporting our commodities price forecasts for Step Change(baseline)and alternative scenarios Progressive Change,Exploring Alternatives,and Hydrogen Exports.The scenario settings can be summarised as follows:Step Change:this is the basel
42、ine scenario.Global and domestic policy action to mitigate emissions is assumed to be well aligned.All governments worldwide fulfil their announced climate action pledges.As a result,climate warming is limited to 1.8C by 2100(RCP 2.6).Progressive Change:this is a slow economic growth scenario,with w
43、eaker population and productivity growth in the long run.There is less global policy coordination and global action is insufficient.As a result,the world is on a path to 2.6C by 2100(RCP 4.5).Exploring Alternatives:similar to the Step Change scenario,global policy intention is well aligned in this s
44、cenario.However,some countries take longer to fulfil their policy commitments.As a result,climate warming reaches 2.0C by 2100(RCP 3.5).Hydrogen Export:This is a higher growth pathway to the Step Change scenario,with stronger population and productivity growth in the long run.Both Australia and its
45、global counterparts aggressively pursue net zero,limited global warming to 1.5C by 2100(RCP 1.9).Additionally,Australia focusses investment in development of its hydrogen export sector,becoming a leader in hydrogen exports globally.2.1 NEAR TERM ASSUMPTIONS In the near term,the key themes affecting
46、the domestic and global economic outlook are the Russia-Ukraine conflict,supply chain pressures,government policy,and further COVID-19 disruptions.The severity of these factors will affect the price of commodities going forward.Recently,a combination of strong demand,ongoing supply chain disruptions
47、 and the economic implications from the Russia-Ukraine conflict has resulted in high inflationary pressures domestically and globally.As a result,central banks around the world have responded by aggressively tightening interest rates.We expect these forces to weigh on consumer demand in the near-ter
48、m,but uncertainty remains around the severity of these forces.In addition to these factors,Chinas zero-COVID policy presents a downside risk as further lockdowns will dampen the near-term global economic outlook and reduce demand for Australian exports.Further lockdowns will also prolong global supp
49、ly chain disruptions.In the Step Change(baseline)scenario,the recent supply-side problems are expected to ease soon,with inflation expected to peak in FY23 before swiftly returning to levels consistent with the Reserve Bank of Australias(RBA)target.Underpinning this is the assumption that a long mil
50、itary conflict in Ukraine is avoided and thereby ease pressure on commodity prices,particularly for oil,gas and grains.However,there remain some headwinds to the domestic economy as interest rates rise rapidly for the RBA to curb demand-driven inflationary pressure and manage future inflationary exp
51、ectations.In addition to this,governments are expected to reduce economic stimulus,which will also suppress domestic consumption in the near term.China is expected to continue their zero-COVID policy;however future lockdowns are expected to be better managed and therefore reduce the economic impacts
52、 of a COVID resurgence.AEMO Commodities Scenario Forecasts FY2023 9 Given the uncertainty around the near-term themes,such as the timing and severity of the supply-side problems,it is appropriate to consider various scenarios.The scenarios considered in this analysis includes:Progressive Change:In t
53、his scenario,global and domestic headwinds weigh on economic activity,with high commodity prices and prolonged supply disruptions fuelling inflationary pressures in the near-term.The scenario assumes a worsening of the Russia-Ukraine conflict.As a result,Russian supply of gas and oil to Europe comes
54、 to an end in H2 2022.Russian oil production recovers in the medium term and converges with Step Change amid diversification of exports to other trading partners.However,this leads to energy market disruptions that are broader and more protracted in the near-term,putting upward pressures on inflatio
55、n expectations globally.Strong inflationary pressures and inflation expectations trigger a swift response from central banks,including the RBA,the Federal Reserve and the European Central Bank(ECB),to tighten monetary policy more aggressively compared to Step Change.This reduces consumer confidence
56、leading to weaker economic activity,particularly in the Eurozone,and reduces the demand for commodities.Hydrogen Export:This scenario is an upside to Step Change,which sees inflationary pressures ease quickly as global and domestic supply chain disruptions are resolved earlier than expected.The Hydr
57、ogen Export scenario assumes that the Russia-Ukraine conflict comes to an early end.Russian oil exports are higher than in Step Change,but still significantly weaker in the near-term compared to pre-war.Nonetheless,this results in a stronger fall in oil prices compared to Step Change.Amidst diminish
58、ing energy market disruptions and fading COVID concerns,an improvement in confidence results in a sharp consumer-led global recovery.However,policy tightening remains a headwind as central banks continue to tame inflation and inflation expectations,though policy rates are expected to peak sooner in
59、the US compared to Step Change.Exploring Alternatives:Near term assumptions for Exploring Alternatives are the same as for Step Change.AEMO Commodities Scenario Forecasts FY2023 10 3.COMMODITIES PRICE FORECASTS:STEP CHANGE This section presents the Step Change forecasts for the following commodities
60、:Brent crude oil prices Newcastle thermal coal prices LNG netback prices(Wallumbilla)The price forecasts are consistent with the key assumptions and macroeconomic settings for the Step Change scenario.In the near term,commodity prices,particularly for oil,gas and grains,are expected to fall from rec
61、ent highs as an extended military conflict in Ukraine is avoided.Over the medium to longer-term,commodity prices will be driven by the degree of global efforts towards decarbonisation.This scenario assumes relatively strong global coordination towards a greener pathway,which reflects the shifting po
62、licy landscape.Domestically,this aligns with Australias commitment towards net zero by 2050 and we see strong effort towards energy transition investment.3.1 BRENT CRUDE OIL PRICE FORECASTS The price of brent crude oil is expected to fall from its peak for the September 2022 quarter as recessionary
63、concerns in major foreign economies weigh on demand.Beyond this,oil prices are expected to fall further with the increase in supply following a ramp up in US production and OPECs agreement to raise their monthly production quotas.Nonetheless,prices are expected to remain relatively elevated,supporte
64、d by Chinas reopening and the recovery in air travel.In the longer term,the price of crude oil is expected to see little growth,averaging around AUD 98/bl.Underpinning this is a greater coordinated effort towards a greener pathway,including the move toward electric vehicles and sustainable transport
65、ation.Fig.3.Brent Crude Oil Price,Step Change,Nominal Source:BIS Oxford Economics/Haver Analytics AEMO Commodities Scenario Forecasts FY2023 11 3.2 NEWCASTLE THERMAL COAL PRICE FORECASTS The price of Newcastle thermal coal is expected to peak in the September 2022 quarter,at AUD 584/tonne.The recent
66、 high prices are driven by strong demand for higher-grade thermal coal,particularly from Japan,South Korea,Taiwan,and to some extent,the EU as these economies seek to end imports from Russia.Prices are then expected to fall relatively quickly as supply-side issues dissipates and energy markets stabi
67、lise.In the longer term,the price of Newcastle thermal coal is expected to decline over time.This follows a reduction in demand as the world decarbonises and thereby transitions away from fossil fuels,particularly in electricity generation.Fig.4.Newcastle Thermal Coal Price,Step Change,Nominal Sourc
68、e:BIS Oxford Economics/World Bank Commodity Prices/Resource and Energy Quarterly(Office of the Chief Economist)LNG Netback Price Forecasts 3.3 LNG NETBACK PRICES WALLUMBILLA The LNG netback price(Wallumbilla)is expected to peak in the September 2022 quarter,at AUD 67/GJ.This is driven by strong glob
69、al demand for natural gas as well as a reduction in Russian gas supply to Europe.Beyond this,prices are expected fall as supply-side problems fade but remain elevated,particularly during the European winter and spring seasons which lasts until mid-2023.In the longer term,the LNG netback price(Wallum
70、billa)is expected to see little growth,averaging at around AUD 18/GJ.This is underpinned by a transition away from the use of LNG in residential buildings and electricity generation.AEMO Commodities Scenario Forecasts FY2023 12 Fig.5.LNG Netback Price(Wallumbilla),Step Change,Nominal Source:BIS Oxfo
71、rd Economics/ACCC Netback Price Forecasts AEMO Commodities Scenario Forecasts FY2023 13 4.COMMODITIES PRICE FORECASTS:ALTERNATIVE SCENARIOS This section presents risks to the Step Change commodities price forecasts.This was achieved by varying the near-term and longer-term assumptions that underpin
72、the forecasts.In the near-term,the alternative scenarios capture the uncertainty around the timing of the Russia-Ukraine war,the severity of global supply chain disruptions,and the state of the global economy.In the long term,the alternative scenarios capture the varying degree of decarbonisation ef
73、forts at a global and domestic scale,as well as differences in the exchange rates.4.1 BRENT CRUDE OIL PRICE FORECASTS In comparison to the Step Change scenario:Progressive Change:Prolonged supply chain disruptions exacerbated by rapidly rising interest rates will result in a contraction of global ec
74、onomic activity in this scenario.This reduces the demand for crude oil and sees prices fall to levels that are below Step Change over the coming year.However,a prolonging of the Russia-Ukraine conflict will likely drive oil prices higher in the medium term,with oil prices peaking at around AUD 139/b
75、l in 2024.In the long term,the price of crude oil is expected to remain higher than in Step Change due to a greater reliance on fossil fuels and a weakening exchange rate against the US dollar Hydrogen Export:Energy market disruptions ease swiftly following an early end to the Russia-Ukraine conflic
76、t.This results in a sharp fall in crude oil prices in the near term,reaching below pre-pandemic levels by early 2024.Beyond this,the price of crude oil is expected to remain below that of Step Change due to lower demand for fossil fuels.In the long term,prices are further lowered by a stronger Austr
77、alian dollar relative to the US dollar.Exploring Alternatives:The near-term assumptions are the same.However,the price of crude oil is higher in the long term,reflecting weaker global action towards decarbonisation compared to Step Change.Fig.6.Brent Crude Oil Price,All Scenarios,Nominal Source:BIS
78、Oxford Economics/Haver Analytics AEMO Commodities Scenario Forecasts FY2023 14 4.2 NEWCASTLE THERMAL COAL PRICE FORECASTS The disruption from the Russia-Ukraine war is expected to largely impact oil and gas prices.That said,Russia is also one of the largest global exporters of coal.While sanctions o
79、n Russian coal are starting to take effect in some European countries and Japan,others have stepped in to take advantage of the unwanted supply.The result for global prices is that the trade uncertainty created from the war in Ukraine is adding another factor to support higher coal prices in what is
80、 already an inflated market.As a result,there is potential for Newcastle thermal coal prices to continue rising in the short term as captured by the Progressive Change scenario.In the medium to long term,prices begin to diverge more across scenarios as the different assumptions on climate change act
81、ions kick in.Progressive Change:Continued coal trade disruption and the high price of LNG leads to an increase in demand for thermal coal,particularly for high-grade thermal coal.As a result,the price for Newcastle thermal coal is expected to peak in December 2022 and remain relatively higher in the
82、 near term.In the medium to long term,thermal coal prices are expected to remain relatively flat and remain higher than Step Change.This is driven by relatively stronger global demand for thermal coal despite domestic decarbonisation efforts.Hydrogen Export:This scenario sees the fastest decline in
83、the price of thermal coal,reaching its long-term equilibrium price of around AUD 53/tonne by 2030,a few years before Step Change.This reflects both a more aggressive fading out of coal as well as earlier and greater investment towards clean energy.Exploring Alternatives:This scenario is similar to S
84、tep Change,except that there is a lag in decarbonisation targets globally,albeit to a lesser degree than Progressive Change.Therefore,the price of thermal coal falls much slower compared to Step Change and remains slightly higher in the long term.Fig.7.Newcastle Thermal Coal Price,All Scenarios,Nomi
85、nal Source:BIS Oxford Economics/World Bank Commodity Prices/Resource and Energy Quarterly(Office of the Chief Economist)4.3 LNG NETBACK PRICE(WALLUMBILLA)FORECASTS In comparison to the Step Change scenario:Progressive Change:The LNG netback price(Wallumbilla)is expected to peak higher in the Septemb
86、er 2022 quarter,at around AUD 85/GJ,due to a prolonging of the war in Ukraine.AEMO Commodities Scenario Forecasts FY2023 15 Prices are expected to remain elevated for longer and diverge further in the long term due to slower decarbonisation progress.Hydrogen Export:There is little divergence with St
87、ep Change until around mid-2023 as the demand for gas remains strong globally.Beyond this,prices begin to unwind faster as energy markets stabilise following the end of the Russia-Ukraine conflict.Exploring Alternatives:There is no divergence in prices in the near to medium term as the assumptions a
88、re the same.In the long term,prices are expected to remain relatively flat,but above Step Change,reflecting the lags in decarbonisation targets globally.Fig.8.LNG Netback Price(Wallumbilla),All Scenarios,Nominal Source:BIS Oxford Economics/ACCC Netback Price Forecasts AEMO Commodities Scenario Forec
89、asts FY2023 16 APPENDIX A:OXFORD ECONOMICS GEM MODEL FORECASTS This section provides an overview of Oxford Economics Global Economic Model which underpin our global macro forecasts.Global Economic Model The Oxford Global Economic Model(GEM)is the most widely used commercial International Macro Model
90、,with clients including international institutions,Ministries of Finance and central banks around the world,and a large number of blue-chip companies.In addition,the GEM is used internally within Oxford Economics,for both baseline forecasting and simulating alternative scenarios for the world econom
91、y and individual economies.The GEM has constantly evolved over the past three decades,reflecting continuous interaction between the Global Economic Model and changing conditions in the policy sphere,private sector,and global institutions.It is intended for use both by Oxford Economics and by clients
92、 to produce forecasts for a wide range of international macroeconomic and related variables,and for“what-if”scenario analysis.Clients can produce forecasts using the model either with a detailed internal forecasting exercise or simply by taking the Oxford Economics baseline and adjusting a small num
93、ber of key inputs/assumptions.Scenario analysis can focus on the expected impact of a particular event or policy change or cover a wider range of alternative outcomes for stress testing.It has long been one of Oxford Economics guiding principles that many of the most important and interesting macroe
94、conomic issues are inherently international.Globalization means that policy makers and analysts must form judgements about developments in their domestic economy and in the economies of countries with which they have trade and financial ties.For instance,a shift in US monetary policy has global repe
95、rcussions;fossil fuel and commodity price shocks are significant source of terms of trade movements in Europe;governments increasingly collaborate over monetary,fiscal and environmental policies.These stylized facts imply that single country econometric models,which treat world trade,world prices an
96、d exchange rates as exogenous,are not best suited to analysing some of the most important issues of interest to financial and business economists.The root cause of this integration is the massive increase in trade and capital flows between countries in the post-war period,and Oxford Economics client
97、 base is testament to the growth in interest in international issues.With offices throughout the world,in the UK,elsewhere in Europe,the US and Asia,Oxford Economics aims to combine access to local information and expertise with a global outlook to provide a truly international service.The Oxford Gl
98、obal Economic Model reflects this priority,as coverage of the major trading countries has deepened and widened.The current Oxford Model improves on previous vintages by incorporating descriptions of 80 individual countries.The model is“well-behaved”in the sense that it has a coherent long-run equili
99、brium embedded which the model will tend to converge to in the long run for a wide range of sensibly calibrated shocks.It maintains the tradition of allowing for significant cross-country differences in economic structure,but ensures that those differences truly reflect economic,as opposed to econom
100、ic model-builders,idiosyncrasies.Where possible,and it is possible in the majority of cases,the functional form for equations is left the same across countries.The exceptions chiefly reflect examples where countries are heavily dependent on particular sectors such as oil and emerging market countrie
101、s where Foreign Direct Investment(FDI)plays a major role in the economy.Where the data allow,some countries have more detail on trade,distinguishing fuel and non-fuel and modelling profit and dividend receipts.AEMO Commodities Scenario Forecasts FY2023 17 Parameters across countries differ,and this
102、means that different countries exhibit different behaviour in response to shocks(although economy structure also accounts for variations).Now,however,tracing the root cause of these differences,and attributing them to underlying behaviour or structure,is much simpler.For instance,real wage rigidity
103、is higher in some countries than others,and specific coefficients in wage and price equations reflect this.Unemployment will tend to rise further and faster in these countries in response to an adverse demand shock,even though the functional form of wage and price equations is identical across count
104、ries.Structure of the GEM Very broadly,the Oxford Global Economic Model is Keynesian in the short-run and monetarist in the long-run.This means that increased demand will lead to higher output and employment initially,but eventually this feeds through into higher wages and prices.Given an inflation
105、target,interest rates have to rise,reducing demand again(crowding out).In the long run,output and employment are determined by supply side factors.Interactions between countries through trade,exchange and interest rates,capital flows and oil/commodity prices are modelled in detail.Within this theore
106、tical framework,the structure of each country in the Oxford Global Economic Model can be generalized as follows:Consumption-function of real income,wealth and interest rates.Investment-q formulation with accelerator terms.Exports-depend on world demand and relative unit labour costs.Imports-depend o
107、n total final expenditure and competitiveness.Real wages depend on productivity and unemployment relative to NAIRU.Prices are a mark-up on unit costs,with profits margins a function of the output gap.Monetary policy endogenised.Options include Taylor rule,fixed money and exchange rate targeting.Exch
108、ange rate determined by uncovered interest parity(UIP)in the short run and equilibrium exchange rates in the long run.Expectations are generally adaptive,with an option to use forward-looking expectations on a model-consistent basis for certain key financial variables.Countries are linked in the Oxf
109、ord Global Economic Model via:Trade(Exports driven by weighted matrix of trading partners import demand).Competitiveness(IMF relative unit labour costs where available,relative prices elsewhere).Interest Rates and Exchange Rates.Commodity Prices(e.g.oil,gas and coal prices depend on supply/demand ba
110、lance;metal prices depend on growth in industry output).World Price of Manufactured Goods.Country model detail The structure of each of the country models is based on the income-expenditure accounting framework.However,the models have a coherent treatment of supply.In the long run,each of the econom
111、ies behaves like the classic one sector economy under Cobb-Douglas technology(production function).Countries have a natural growth rate,which is determined by capital stock,labour supply adjusted for human capital,and total factor productivity.Output cycles around a deterministic trend,so the level
112、of potential output at any point in time can be defined,along with a corresponding natural rate of unemployment.Firms are assumed to set prices given output and the capital stock,but the labour market is characterized by imperfect competition.Firms bargain with workers over wages but choose the opti
113、mal level of employment.Under this construct,countries with higher real wages demonstrate AEMO Commodities Scenario Forecasts FY2023 18 higher long-run unemployment,while countries with more rigid real wages demonstrate higher unemployment relative to the natural rate.Inflation is a monetary phenome
114、non in the long run.All of the models assume a vertical Phillips curve,so expansionary demand policies place upward pressure on inflation.Unchecked,these pressures cause an unbounded acceleration of the price level.Given the negative economic consequences of this(as seen in the 1970s in developed ec
115、onomies and more recently in some emerging markets),most countries have adopted a monetary policy framework which keeps inflation in check.The model mirrors this,by incorporating endogenous monetary policy.For the main advanced economies,monetary policy is underpinned by the Taylor rule,captured usi
116、ng an inflation target,such that interest rates are assumed to rise when inflation is above the target rate,and/or output is above potential.The coefficients in the interest rate reaction function,as well as the inflation target itself,reflect assumptions about how hawkish different countries are ab
117、out inflation.(A by-product of this system is that scenarios under fixed interest rates only make sense in the short run.A scenario which imposes a fixed interest rate,and therefore assumes a lack of monetary policy,in conjunction with a vertical Phillips curve,would result in accelerating-or decele
118、rating-inflation after several years.)Demand is modelled as a function of real incomes,real financial wealth,real interest rates and inflation.Investment equations are underpinned by the Tobins Q Ratio,such that the investment rate is determined by the return relative to the opportunity cost,adjuste
119、d for taxes and allowances.Countries are assumed to be“infinitely small”,in the sense that exports are determined by aggregate demand and a country cannot ultimately determine its own terms of trade.Consequently,exports are a function of world demand and the real exchange rate,and the world trade ma
120、trix ensures adding-up consistency across countries.Imports are determined by real domestic demand and competitiveness.Expectations The Oxford Global Economic Model standard mode assumes adaptive rather than forward looking expectations because we believe that introducing expectations on the basis o
121、f economic theory is more advantageous than using the forward-looking assumption ubiquitously.There is disagreement among economists about whether forward looking expectations are consistent with observed data,which become even more acute in light of the difficulties with obtaining accurate data on
122、expectations for model-building purposes.Instead,we generally adopt adaptive expectations,which are introduced using a framework in which expectations are formed using the actual predicted values from the model.Exogenous variables are assumed to be known a priori.Where appropriate,the model does int
123、roduce expectations implicitly and explicitly,therefore accounting for how and the extent to which agents respond to information about changes in fundamentals.An example of this includes our derivation of exchange rate forecasts which implicitly capture expectations:in the short run,the exchange rat
124、e is driven by movements in domestic interest rates relative to the US,therefore accounting for uncovered interest rate parity.Another example is our use of a variable for forward guidance to capture expected movements in interest rates.In addition,there is an option to use forward-looking expectati
125、ons explicitly on a model-consistent basis for certain key financial variables.AEMO Commodities Scenario Forecasts FY2023 19 APPENDIX B:FOREIGN EXCHANGE RATES This section highlights the different AUD/USD exchange rate(FX)profiles across the scenarios.Movements in the AUD is generally influenced by
126、a combination of commodity prices and the general health of the local and global economy.The Step Change FX profile is consistent with the BIS Oxford Economics baseline view,which sees the exchange rate fall in the near term as energy market disruptions ease and is expected to settle at around 0.80
127、USD per AUD in the long term.The Exploring Alternatives scenario follows the same profile as in Step Change due to broadly similar economic settings.The Progressive Change scenario presents a down-side risk to economic growth.In the near term,disruptions in the energy market from the Russia-Ukraine
128、conflict creates strong demand for commodities,supporting Australian commodity exports and therefore the AUD.The AUD is expected to peak in late 2023 before falling below its long-run equilibrium rate as global activity slows.The long-run exchange rate is lower than in Step Change,at 0.75 USD per AU
129、D,reflecting a weaker domestic economy relative to the US.In contrast,the Hydrogen Export scenario sees the AUD sitting higher at 0.87 USD per AUD in the long run.This is driven by a combination of Australias new hydrogen exporting industry and strong global activity and consumption,which places upw
130、ard pressure on the exchange rate.Fig.9.Foreign Exchange Rates(AUD/USD),All Scenarios,Nominal Source:BIS Oxford Economics/Haver Analytics AEMO Commodities Scenario Forecasts FY2023 20 APPENDIX C:ESTIMATING NEWCASTLE THERMAL COAL AND LNG NETBACK PRICE The scenarios presented in this report are built
131、using the Global Economic Model(GEM),which have commodity price variables such as the global price of thermal coal and LNG JKM prices.These series are then transformed to estimate the Newcastle thermal coal prices and the LNG Netback prices(Wallumbilla).This section provides greater detail on the me
132、thodology used to determine these prices C.1 Newcastle Thermal Coal The prices of Newcastle thermal coal have tracked global prices of thermal coal very closely in the past and this relationship is expected to maintain going forward for the Step Change(baseline)scenario.Therefore,we apply the growth
133、 rates of global thermal coal prices to the most recent price estimates for Newcastle thermal coal.We also note that prices for the June and September 2022 quarters are estimated separately.The June 2022 price is an estimate taken from the Office of the Chief Economists Resources and Energy Quarterl
134、y Forecast Data.While the September 2022 price is an estimate based on the near-month futures contract for Newcastle coal in July and August,which is a close proxy for the spot prices over that period.Fig.10.Global vs Newcastle Thermal Coal Prices,Nominal Source:BIS Oxford Economics/World Bank Commo
135、dity Prices/Resource and Energy Quarterly(Office of the Chief Economist)AEMO Commodities Scenario Forecasts FY2023 21 C.2 LNG Netback Price The LNG netback price is the effective price that LNG producers can expect to receive for exported LNG after applicable costs are subtracted from the LNG price.
136、These costs are generally incurred in the transportation stage between the gas production wells and an LNG processing facility.The LNG netback price series provided in this report is derived based using the ACCCs methodology2.The following steps outline this process:1.Starting with the LNG JKM price
137、 series:the BIS Oxford Economics model(GEM)provides a forecast of the LNG JKM price measured in USD/Mmbtu.2.Obtaining the Gladstone free-on-board(FOB)price:Freight costs between Gladstones export terminal and Japan/Korea are then subtracted.Here,BIS Oxford Economics used ACCCs estimates holding frei
138、ght costs(on average)at 2.7%of the commodity price.This is effectively the LNG Netback price at the export terminal.3.Converting to AUD/GJ:The FOB price series is then converted into AUD/GJ.This uses the BIS Oxford Economics foreign exchange model and the ACCCs Mmbtu to GJ conversion assumptions.4.N
139、etting back LNG plant costs:The Gladstone FOB prices(in AUD/GJ)is then subtracted by plant costs provided by the ACCC.“The ACCC use estimates of short-run marginal LNG plant costs(averaged across Queensland LNG producers).These costs include the value of the gas that is consumed as fuel during the l
140、iquefaction process as well as LNG plant operating expenditure.3”5.Adjust for transportation costs from well-head to export facility:Finally,the series is then subtracted by the ACCCs estimate of short-run marginal transport costs between the wellhead and the LNG facility in Wallumbilla(averaged acr
141、oss the Queensland LNG producers).2 LNG Netback Prices,ACCC,https:/www.accc.gov.au/regulated-infrastructure/energy/gas-inquiry-2017-2025/lng-netback-price-series 3 Guide to the LNG Netback Price Series,ACCC,https:/www.accc.gov.au/sites/www.accc.gov.au/files/Guide%20to%20the%20LNG%20netback%20price%2
142、0series%20-%20September%202022.pdf AEMO Commodities Scenario Forecasts FY2023 22 APPENDIX D:BENCHMARKING This section provides a comparison of BIS Oxford Economics commodity price forecasts against alternative sources of forecast.The main objective of this section is to assess how the Step Change(ce
143、ntral case)forecast developed by BIS Oxford Economics sits relative to other outlooks in the market.This chapter is structured in two parts.The first part compares the near-term profile,which is dictated by the assumptions around current developments such as timing of the end of the war in Ukraine a
144、nd pace of monetary tightening by central banks around the world.The second part compares the long-run trajectory,which is primarily determined by the decarbonisation pathway.For this exercise,BIS Oxford Economics has relied on independent forecasts from the following sources:Consensus Economics for
145、ecasts survey(August,2022)4 Office of the Chief Economist(OoCE),Resources and Energy Quarterly(REQ)June 2022 Australian Competition&Consumer Commission(ACCC)International Energy Agency(IEA)SHORT-TERM FORECAST BENCHMARKING Generally,across all commodities,the Step Change forecasts are well aligned wi
146、th market consensus in the near term.In the case of Newcastle Thermal Coal Prices and the LNG Japan-Korea Marker(JKM),BIS Oxford Economics expects a slightly faster pace of correction in the prices from their currently elevated levels.This is primarily underpinned by the assumptions that the Russia-
147、Ukraine conflict and general supply-chain bottlenecks will ease in the next few quarters.Brent Oil Price The Step Change projections are well aligned with the market consensus forecasts.Market consensus expects prices to fall back slightly faster(USD$82.8/bl by Mar-24 compared with USD$88.1 in Step
148、Change.4 Consensus Economics is an international economic survey organisation that polls economic forecasters,covering both public and private institutions.The Consensus Economics forecasts represent the mean forecasts from the survey results.AEMO Commodities Scenario Forecasts FY2023 23 Fig.11.Bren
149、t Crude Oil Price(Nominal):BIS OE Step Change vs.Alternative Sources Source:BIS Oxford Economics/Consensus Newcastle Thermal Coal Forecasts For the Newcastle Thermal Coal Forecasts,the figure below provides a comparison against market consensus as well as the Office of the Chief Economists forecasts
150、 published in their Resource and Energy Quarterly report.The Step Change projections are generally well aligned to market consensus over the next 12 months.Step Change forecasts sit within 1%of market consensus forecasts over this period.Beyond this,Step Change includes a faster pace of correction w
151、ith prices falling to USD$110/tonne compared to USD$145/tonne for market consensus.This largely reflects BIS OEs assumptions around the timing of easing of supply constraining factors,such as the Russia-Ukraine conflict and supply chain bottlenecks as well as weakening demand in response to monetary
152、 policy tightening measures.Fig.12.Newcastle Thermal Coal Price(Nominal):BIS OE Step Change vs.Alternative Sources Source:BIS Oxford Economics/Consensus/Resource and Energy Quarterly(Office of the Chief Economist)AEMO Commodities Scenario Forecasts FY2023 24 Both the market consensus forecasts and t
153、he Step Change forecasts sit consistently above the OoCE projections in the near term.By the end of this forecast horizon,Step Change is closer to OoCE forecast(USD$121/tonne,March-24).The near-term differences in profiles,we expect,are owing to a difference in timing of when the forecasts were deve
154、loped.There have been strong upward movements in the price of thermal coal over the last month driven by strong demand for higher-grade thermal coal,particularly from Japan,South Korea,Taiwan,and to some extent,the EU as these economies seek to end imports from Russia.Fig.13.Newcastle Thermal Coal P
155、rice(Nominal):Daily Historical Prices Source:BIS Oxford Economics/Haver Analytics LNG Netback Price Forecasts For the Wallumbilla LNG Netback Price there are limited projections publicly available to benchmark against.Below we provide a comparison of Step Change projections to ACCCs published August
156、 2022 outlook.We note that the Step Change forecasts for the Sep-22 quarter are stronger than ACCCs outlook.However,beyond this Step Change projects a much faster pace of correction than ACCC.ACCC expects the current elevated prices to be sustained until late 2023,before beginning to correct.AEMO Co
157、mmodities Scenario Forecasts FY2023 25 Fig.14.LNG Netback Price(Wallumbilla),Nominal:BIS OE Step Change vs.Alternative Source Source:BIS Oxford Economics/ACCC Delving into this further,two key components that determine the LNG Netback Price are the LNG Japanese Korea Marker(JKM)price,which is the re
158、ference spot market price for the Asian market,and the exchange rate.For these individual components,market consensus forecasts are available and so we provide below a comparison of Step Change,ACCC and market consensus forecasts for these individual sub-components of the LNG Netback Price.LNG Japan
159、ese Korea Marker As Fig.15 shows,the ACCC projections are markedly stronger than both Step Change projections and market consensus forecasts.This is the main driver of difference between Step Change projections and ACCC projections for the final LNG Netback Price5.Step Change and Consensus projectio
160、ns are well aligned until Mar-2023.Step Change projections have a faster fall back beyond this,expecting the LNG JKM price to get back to USD$16.1/Mmbtu by June-24 compared with market consensus of USD$23.5/Mmbtu.Again,this is underpinned by our assumptions around unwinding of current supply side pr
161、essures.We also note,as recent data highlights,that commodity price movements are subject to considerable volatility and that uncertainty on the price trajectory increases over time.5 The assumptions for Plant Operating Costs;Transport&Freight Costs and Plant Efficiency are sourced from the ACCC(htt
162、ps:/www.accc.gov.au/regulated-infrastructure/energy/gas-inquiry-2017-2025/lng-netback-price-series).Please see Appendix C for more details on calculating final LNG netback price.AEMO Commodities Scenario Forecasts FY2023 26 Fig.15.LNG JKM Price(Nominal):BIS OE Step Change vs.Alternative Sources Sour
163、ce:BIS Oxford Economics/Consensus/ACCC While the ACCC forecasts are higher than what our view is of the most likely path for this market,we note that ACCCs projection sits within the range of alternate scenarios that we have considered,as shown in Fig.16.Fig.16.LNG JKM Price(Nominal):BIS OE Progress
164、ive Change vs.ACCC projections Source:BIS Oxford Economics/ACCC AEMO Commodities Scenario Forecasts FY2023 27 Exchange Rate Forecasts Exchange rate forecasts is a secondary source for difference between ACCC and BIS OE projections for final LNG Netback Price.As we can see from the chart below,ACCC a
165、ssumes a constant exchange rate of USD:AUD 0.70.By contrast,Step Change expects the Australian dollar to appreciate,sitting at USD:AUD 0.77 by Dec-24.Consensus is slightly lower,at USD:AUD 0.73 by Dec-24.Fig.17.Exchange Rate Forecast(Nominal):BIS OE Step Change vs.Alternative Sources Source:BIS Oxfo
166、rd Economics/Consensus/ACCC AEMO Commodities Scenario Forecasts FY2023 28 LONG-TERM FORECAST BENCHMARKING The long run outcomes across scenarios are largely determined by the assumptions on global commitments to decarbonisation.This is important for the commodities presented here as it dictates the
167、pace of structural shift in demand away from emissions intensive fossil fuels.We assume that as demand falls away under these alternative scenarios,the highest cost(least competitive)suppliers of fossil fuels are the first to exit the market.As such,the price of the marginal supply of fossil fuels f
168、alls,which is then reflected in the commodity prices.There is limited information available to benchmark against for the long-run scenario forecasts.That said,the AEMO scenario settings broadly align to the IEA scenarios as follows Fig.18.AEMO to IEA Scenario Mapping We provide here a comparison of
169、the AEMO scenario results to projections from the International Energy Agency(in their 2021 World Energy Outlook),by commodity.Given the material developments in the commodity markets since the 2021 World Energy Outlook(WEO)was published,it is more useful to focus on the trends rather than the price
170、 levels.As such the discussion in this section is centred on the trends.Brent Oil Price Projections In the medium term(2020-2030)BIS Oxford Economics projections are broadly aligned across scenarios.The exception here is Progressive Change,in which IEA projects stronger price growth.Over the long-ru
171、n(to 2050),the Hydrogen Export scenario projections are well aligned to IEAs Net Zero Emissions scenario forecasts.In the other scenarios,the commodity price forecasts developed for AEMOs scenarios generally reflect a stronger fall in real prices.AEMO Scenario IEA(World Energy Outlook 2021)ScenarioS
172、tep ChangeSustainable Development Goal(SDS)Progressive ChangeStated Energy Policies(STEPS)Hydrogen ExportNet Zero Emissions(NZE)Exploring Alternative ScenarioAnnounced Pledges Scenario(APS)AEMO Commodities Scenario Forecasts FY2023 29 Fig.19.Brent Crude Oil Price(2020 Real):BIS Oxford Economics and
173、IEA Source:BIS Oxford Economics/Haver Analytics,IEA World Gas Price Projections The IEA publish projections for the Japanese gas import price.This isnt directly comparable to the LNG netback price or the LNG JKM however these indicators are closely linked(especially over the long-term).That is why w
174、e have included a comparison to these gas prices,as a useful reference.BIS Oxford Economics Global Economic Model also produces projections for Japanese gas import prices.This has been used in the comparison to the IEA projections as shown in the table below.These forecasts are consistent with the L
175、NG price projections,across scenarios.As the table below shows,AEMOs scenario projections are well aligned to IEAs projections across all scenarios over the outlook,both in the medium term(to 2030)and the long-term(to 2050).Fig.20.Japanese Gas Prices(Real,2020 terms):BIS OE vs.IEA Source:BIS Oxford
176、Economics/Haver Analytics,IEA Coal Price Projections For thermal coal prices,the IEA reports prices for US,EU,Japan and Coastal China.These figures are not directly comparable to Newcastle Thermal Coal prices.However,it is still useful to compare overall trends across these markets.Please note that
177、trends in an individual thermal coal market may also be influenced by substitution across these markets,in addition to structural shifts across the entire sector.For example,if much of the early coal production exits in a decarbonisation scenario are concentrated in the US market,then this may see a
178、 surge in demand for other markets which would temporarily lift Brent Oil Price(Real USD/bl)202020302050Step ChangeBIS OE41.859.232.8IEA(Sustainable Development)42.056.050.0Progressive ChangeBIS OE41.859.348.4IEA(Stated Policies)42.077.088.0Exploring AlternativesBIS OE41.859.835.8IEA(Announced Pledg
179、es)42.067.064.0Hydrogen ExportBIS OE41.836.324.2IEA(Net Zero Emissions by 2050)42.036.024.0Japanese gas price(Real USD/MBtu)202020302050Step ChangeBIS OE8.39.26.6IEA(Sustainable Development)7.95.45.3Progressive ChangeBIS OE8.310.010.3IEA(Stated Policies)7.98.58.9Exploring AlternativesBIS OE8.39.37.2
180、IEA(Announced Pledges)7.97.66.8Hydrogen ExportBIS OE8.35.65.1IEA(Net Zero Emissions by 2050)7.94.44.2AEMO Commodities Scenario Forecasts FY2023 30 prices in those markets as well.Over the long run,we would expect to see a fall back in prices consistently across markets.In the comparison to the AEMO
181、scenario projections,over the medium term the trends are broadly similar.The Hydrogen Export scenario is the exception where only the US market has sharp price falls while the other markets have a gradual decline.We note that the IEA global coal demand however is broadly consistent with BIS Oxford E
182、conomics for this scenario.IEA projects a 50%decline in demand by 2030 while BIS Oxford Economics forecasts a 60%decline.Given this sharp fall to demand,in our view a more pronounced fall in price is a consistent outcome.Fig.21.Thermal Coal Prices(Real,2020 terms):BIS OE vs.IEA Source:BIS Oxford Eco
183、nomics/Haver Analytics,IEA Over the long-run(to 2050),across all scenarios,AEMOs scenario price forecasts continue to fall at a faster rate than IEA.The IEA note that“In the much more constrained demand environment of the APS and even more so the NZE(where no new coal mines or mine extensions are re
184、quired)prices simply gravitate towards the operating costs of existing projects.6”6 Chapter 2,World Energy Outlook 2021,October-21,https:/www.iea.org/reports/world-energy-outlook-2021 Steam Coal Price(Real USD/tonne)202020302050Step ChangeBIS OE(Global weighted average)65.959.611.7IEA(Sustainable De
185、velopment)US43.024.022.0EU50.058.055.0Japan69.067.063.0Coastal China89.072.066.0Progressive ChangeBIS OE(Global weighted average)65.960.138.7IEA(Stated Policies)US43.039.038.0EU50.067.063.0Japan69.077.070.0Coastal China89.083.074.0Exploring AlternativesBIS OE(Global weighted average)65.960.413.7IEA(
186、Announced Pledges)US43.025.025.0EU50.066.056.0Japan69.073.063.0Coastal China89.077.065.0Hydrogen ExportBIS OE(Global weighted average)65.924.012.5IEA(Net Zero Emissions by 2050)US43.024.022.0EU50.052.044.0Japan69.058.050.0Coastal China89.061.051.0AEMO Commodities Scenario Forecasts FY2023 31 This is
187、 consistent with the overall approach that BIS Oxford Economics takes,which assumes that as demand progressively falls away,suppliers exit the market in merit order from highest cost to least cost and long-term prices broadly reflect marginal cost of supply.While it is difficult to ascertain the exact cause of difference between the two sources of forecasts,we are comfortable that the long-run price projections presented in this report consistently reflect the supply and demand dynamics.AEMO Commodities Scenario Forecasts FY2023 32