The Carbon Ask: effects of climate policy on the value of fossil fuel resources and the implications for technological innovation

Peter Linquiti () and Nathan Cogswell
Additional contact information
Peter Linquiti: George Washington University
Nathan Cogswell: George Washington University

Journal of Environmental Studies and Sciences, 2016, vol. 6, issue 4, No 2, 662-676

Abstract: Abstract Strong policies to address climate change will almost certainly require that large quantities of oil, natural gas, and coal remain underground. Because these resources have economic value, action to reduce carbon emissions means that fossil fuel owners and producers, and other entities in the fossil fuel supply chain, will experience a reduction in wealth. They will be on the receiving end of what we call the “Carbon Ask.” We compile disparate data sources, make some simplifying assumptions, and approximate the value of the Carbon Ask for the world as a whole. We find that the value of the world’s fossil fuel enterprise in a business-as-usual case, unconstrained by climate policy, is about $295 trillion. In a world with a strong climate policy, the value of these resources drops to about $110 trillion, a decrease of $185 trillion, or 63 %. The Carbon Ask is equivalent to 2.4 years of global GDP. After reviewing the literature on resistance to technological innovation during the past two centuries and examining legal challenges to recent US greenhouse gas regulations, we find it unsurprising that the Carbon Ask creates powerful incentives for many stakeholders—who may be firms, workers, consumers, and governments—to resist policies to speed the development and diffusion of new, more environmentally benign technologies. We also find few precedents for policy-driven, rather than market-driven, technological transformations with a scale and scope similar to decarbonization of the global economy.

Keywords: Carbon Ask; Stranded asset; Decarbonization; Carbon budget; Emissions budget; Fossil fuel reserves; Fossil fuel resources (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://link.springer.com/10.1007/s13412-016-0397-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:spr:jenvss:v:6:y:2016:i:4:d:10.1007_s13412-016-0397-2

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13412

DOI: 10.1007/s13412-016-0397-2

Access Statistics for this article

Journal of Environmental Studies and Sciences is currently edited by Walter A. Rosenbaum

More articles in Journal of Environmental Studies and Sciences from Springer, Association of Environmental Studies and Sciences
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().