Optimal Transition from Coal to Gas and Renewable Power Under Capacity Constraints and Adjustment Costs

Renaud Coulomb, Oskar Lecuyer () and Adrien Vogt-Schilb
Additional contact information
Adrien Vogt-Schilb: Inter-American Development Bank

Environmental & Resource Economics, 2019, vol. 73, issue 2, No 8, 557-590

Abstract: Abstract Given a cap on carbon emissions, what is the optimal transition from coal to gas and renewable energy? To answer this question, we model the dependence of the energy sector on both (1) polluting exhaustible resources and (2) long-lived capital such as power plants. To minimise adjustment costs, optimal investments in expensive renewable energy start before phasing out fossil-fuel consumption, and may even start before investing in gas-fired plants. Investment in gas-fired plants can reduce the need for expensive renewable investment in the short term, but they eventually need to be decommissioned to make room to carbon-free power in the long term. Simulations of the European Commission’s Energy Roadmap illustrate and quantify these results.

Keywords: Climate change mitigation; Low-carbon investment; Renewables; Fossil fuels; Resource extraction; Early-scrapping (search for similar items in EconPapers)
JEL-codes: Q54 Q58 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://link.springer.com/10.1007/s10640-018-0274-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Optimal Transition from Coal to Gas and Renewable Power under Capacity Constraints and Adjustment Costs (2014)
Working Paper: Optimal Transition from Coal to Gas and Renewable Power under Capacity Constraints and Adjustment Costs (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:enreec:v:73:y:2019:i:2:d:10.1007_s10640-018-0274-4

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-018-0274-4

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().