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

Abstract

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 fuelmore » 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.« less

Authors:
 [1];  [2];  [3];  [4];  [5];  [3];  [6];  [7];  [8];  [9];  [10];  [11];  [12]
  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.
Publication Date:
Research Org.:
Pacific Northwest National Lab. (PNNL), Richland, WA (United States)
Sponsoring Org.:
USDOE
OSTI Identifier:
1196203
Grant/Contract Number:  
AC05-76RL01830; 265139; 01LA11020B
Resource Type:
Accepted Manuscript
Journal Name:
Technological Forecasting and Social Change
Additional Journal Information:
Journal Volume: 90; Journal Issue: PA; Journal ID: ISSN 0040-1625
Publisher:
Elsevier
Country of Publication:
United States
Language:
English
Subject:
54 ENVIRONMENTAL SCIENCES; 29 ENERGY PLANNING, POLICY, AND ECONOMY; climate change mitigation policies; fossil fuel markets; Copenhagen accord; carbon leakage; inter-fuel substitution

Citation Formats

Bauer, Nico, Bosetti, Valentina, Hamdi-Cherif, Meriem, Kitous, Alban, McCollum, David, Mejean, Aurelie, Rao, Shilpa, Turton, Hal, Paroussos, Leonidas, Ashina, Shuichi, Calvin, Katherine, Wada, Kenichi, and van Vuuren, Detlef. CO₂ emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies. United States: N. p., 2015. Web. doi:10.1016/j.techfore.2013.09.009.
Bauer, Nico, Bosetti, Valentina, Hamdi-Cherif, Meriem, Kitous, Alban, McCollum, David, Mejean, Aurelie, Rao, Shilpa, Turton, Hal, Paroussos, Leonidas, Ashina, Shuichi, Calvin, Katherine, Wada, Kenichi, & van Vuuren, Detlef. CO₂ emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies. United States. doi:10.1016/j.techfore.2013.09.009.
Bauer, Nico, Bosetti, Valentina, Hamdi-Cherif, Meriem, Kitous, Alban, McCollum, David, Mejean, Aurelie, Rao, Shilpa, Turton, Hal, Paroussos, Leonidas, Ashina, Shuichi, Calvin, Katherine, Wada, Kenichi, and van Vuuren, Detlef. Thu . "CO₂ emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies". United States. doi:10.1016/j.techfore.2013.09.009. https://www.osti.gov/servlets/purl/1196203.
@article{osti_1196203,
title = {CO₂ emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies},
author = {Bauer, Nico and Bosetti, Valentina and Hamdi-Cherif, Meriem and Kitous, Alban and McCollum, David and Mejean, Aurelie and Rao, Shilpa and Turton, Hal and Paroussos, Leonidas and Ashina, Shuichi and Calvin, Katherine and Wada, Kenichi and van Vuuren, Detlef},
abstractNote = {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.},
doi = {10.1016/j.techfore.2013.09.009},
journal = {Technological Forecasting and Social Change},
number = PA,
volume = 90,
place = {United States},
year = {2015},
month = {1}
}

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