CO₂ emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies

Journal Article · Thu Jan 01 00:00:00 EST 2015 · Technological Forecasting and Social Change

DOI:https://doi.org/10.1016/j.techfore.2013.09.009· OSTI ID:1196203

Bauer, Nico ^[1]; Bosetti, Valentina ^[2]; Hamdi-Cherif, Meriem ^[3]; Kitous, Alban ^[4]; McCollum, David ^[5]; Mejean, Aurelie ^[3]; Rao, Shilpa ^[6]; Turton, Hal ^[7]; Paroussos, Leonidas ^[8]; Ashina, Shuichi ^[9]; Calvin, Katherine ^[10]; Wada, Kenichi ^[11]; van Vuuren, Detlef ^[12]

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1. Potsdam Institute for Climate Impact Research, Potsdam (Germany)
2. Fondazione Eni Enrico Mattei, Milan (Italy)
3. Centre International de Recherche sur l'Environnement et le Developpement (CIRED), Paris (France)
4. Institute for Prospective Technological Studies (IPTS), Sevilla (Spain)
5. International Institute for Applies Systems Analysis (IIASA), Laxenburg (Austria)
6. International Institute for Applies Systems Analysis (IIASA), Laxenburg (Austria)Paul
7. Paul Scherrer Inst. (PSI), Villigen (Switzerland)
8. National Technical Univ. of Athens (Greece)
9. National Institute for Environmental Studies (NIES) Tsukuba (Japan)
10. Pacific Northwest National Lab. (PNNL), Richland, WA (United States)
11. Research Institute of Innovative Technology for the Earth (RITE), Kyoto (Japan)
12. Netherlands Environmental Assessment Agency (PBL) Bilthoven (Netherlands); Utrecht Univ. (Netherlands). Copernicus Inst.

This paper explores a multi-model scenario ensemble to assess the impacts of idealized and non-idealized climate change stabilization policies on fossil fuel markets. Under idealized conditions climate policies significantly reduce coal use in the short- and long-term. Reductions in oil and gas use are much smaller, particularly until 2030, but revenues decrease much more because oil and gas prices are higher than coal prices. A first deviation from optimal transition pathways is delayed action that relaxes global emission targets until 2030 in accordance with the Copenhagen pledges. Fossil fuel markets revert back to the no-policy case: though coal use increases strongest, revenue gains are higher for oil and gas. To balance the carbon budget over the 21st century, the long-term reallocation of fossil fuels is significantly larger—twice and more—than the short-term distortion. This amplifying effect results from coal lock-in and inter-fuel substitution effects to balance the full-century carbon budget. The second deviation from the optimal transition pathway relaxes the global participation assumption. The result here is less clear-cut across models, as we find carbon leakage effects ranging from positive to negative because trade and substitution patterns of coal, oil, and gas differ across models. In summary, distortions of fossil fuel markets resulting from relaxed short-term global emission targets are more important and less uncertain than the issue of carbon leakage from early mover action.

• Research Organization: Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)
• Sponsoring Organization: USDOE
• Grant/Contract Number: AC05-76RL01830; 265139; 01LA11020B
• OSTI ID: 1196203
• Journal Information: Technological Forecasting and Social Change, Vol. 90, Issue PA; ISSN 0040-1625
• Publisher: Elsevier
• Country of Publication: United States
• Language: English

Related Subjects

54 ENVIRONMENTAL SCIENCES
29 ENERGY PLANNING, POLICY, AND ECONOMY
climate change mitigation policies
fossil fuel markets
Copenhagen accord
carbon leakage
inter-fuel substitution