 Hotelling’s Fossil Fuel EconomicsChapter Chapter 5 in The Economics of Optimal Growth Pathways, 2023, pp 113-139 from Springer Abstract: Abstract Fossil fuels such as coal, crude oil, and natural gas are some of the most valuable exhaustible non-renewable resources of the planet. In an economically optimal extraction trajectory of a fossil fuel, the sum of the discounted net revenues from the extractions over time will be maximized. In such a trajectory, the resource rent will rise at the rate of the market interest rate. Eventually, fossil-based fuels will be replaced by an alternative energy source and then by a backstop energy technology. The reliance on fossil fuels by humanity will end at some point in the future, on which both critics and economists would largely agree. The critique regarding the harmful unintended environmental and health consequences of fossil fuel burning remains a formidable challenge to humanity. Notwithstanding, the seven novel advances in technology as well as the two economic mechanisms explained in this chapter have helped address this critical issue in rich countries. Keywords: Exhaustible resources; Fossil fuels; Resource rent; Transition; Backstop technologies; Peak oil; Environmental consequences; Health consequences; Mutual bargaining; Emission permit and trading; Technological advances (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-20754-9_5 Ordering information: This item can be ordered from DOI: 10.1007/978-3-031-20754-9_5 Access Statistics for this chapter More chapters in Springer Books from Springer |
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