A Numerical Analysis of Optimal Extraction and Trade of Oil under Climate Policy
AbstractWe introduce endogenous investments for increasing conventional and non-conventional oil extraction capacity in the integrated assessment model WITCH. The international price of oil emerges as the Nash equilibrium of a non-cooperative game. When carbon emissions are not constrained, oil is used throughout the century, with unconventional oil taking over conventional oil from mid-century onward. When carbon emissions are constrained, oil consumption drops dramatically and the oil price is lower than in the BaU. Unconventional oil is not extracted. Regional imbalances in the distribution of stabilisation costs are magnified and the oil-exporting countries bear, on average, costs three times larger than in previous estimates.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.113.
Date of creation: Sep 2010
Date of revision:
Climate Policy; Integrated Assessment; Oil Production; Oil Revenues; Oil Trade;
Find related papers by JEL classification:
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-02 (All new papers)
- NEP-CMP-2010-10-02 (Computational Economics)
- NEP-CWA-2010-10-02 (Central & Western Asia)
- NEP-ENE-2010-10-02 (Energy Economics)
- NEP-ENV-2010-10-02 (Environmental Economics)
- NEP-MAC-2010-10-02 (Macroeconomics)
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