CO2 emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies
Valentina Bosetti (),
Leonidas Paroussos (),
Kenichi Wada and
Detlef van Vuuren
Technological Forecasting and Social Change, 2015, vol. 90, issue PA, 243-256
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.
Keywords: Climate change mitigation policies; Fossil fuel markets; Copenhagen Accord; Carbon leakage; Inter-fuel substitution (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: CO 2 emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:90:y:2015:i:pa:p:243-256
Access Statistics for this article
Technological Forecasting and Social Change is currently edited by Fred Phillips
More articles in Technological Forecasting and Social Change from Elsevier
Bibliographic data for series maintained by Haili He ().