 Global competition dynamics of fossil fuels and renewable energy under climate policies and peak oil: A behavioural modelPaolo Zeppini and Jeroen van den Bergh Energy Policy, 2020, vol. 136, issue C Abstract: We develop a stochastic decision model to analyse the global competitive dynamics of fossil fuels and renewable energy. It describes coal, oil/gas, solar and wind. These differ not only in pollution intensities but also in profitability and innovation potential. The model accounts for the effect of learning curves, path-dependence and climate policies. Adoption shares endogenously affect agents' utility through increasing returns to adoption, learning, and a ‘peak oil’ capacity constraint. We find that peak oil induces a transition to coal rather than renewable energy, which worsens climate change. By introducing climate policies - such as a carbon tax, market adoption or R&D subsidies for renewables, and eliminating existing subsidies for fossil fuels - we identify potential transition patterns to a low-carbon energy system. Model analysis clarifies two main features of climate policies: which ones solve the climate problem, i.e. do not surpass the critical carbon budget; and how uncertain or variable are final market shares of energy sources. Keywords: Climate change; Energy policy; Externalities; Learning; Peak oil (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:136:y:2020:i:c:s0301421519304859 DOI: 10.1016/j.enpol.2019.110907 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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