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Trends in the extraction of non-renewable resources: The case of fossil energy

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  • Nyambuu, Unurjargal
  • Semmler, Willi

Abstract

This paper considers a strategy for the extraction and production of non-renewable resources that are finite in quantity. Specifically, we illustrate empirical data on reserves, production, consumption, and price evolution for fossil fuel. Our model is an intertemporal model of a short decision time horizon with a monopolistic resource producer extracting non-renewable resources. The model is solved numerically using a finite horizon solution method called Nonlinear Model Predictive Control (NMPC), which approximates well models with a longer decision time horizon. Consistent with the results of recent empirical studies, our numerical solution method shows a U-shaped path for the price and an inverted U-shaped path for the extraction rate, in the case of modest initial stock of proved reserves.

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  • Nyambuu, Unurjargal & Semmler, Willi, 2014. "Trends in the extraction of non-renewable resources: The case of fossil energy," Economic Modelling, Elsevier, vol. 37(C), pages 271-279.
    • Handle: RePEc:eee:ecmode:v:37:y:2014:i:c:p:271-279
    DOI: 10.1016/j.econmod.2013.11.020
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    Cited by:

    1. Hala Abu-Kalla & Ruslana Rachel Palatnik & Ofira Ayalon & Mordechai Shechter, 2020. "Hoard or Exploit? Intergenerational Allocation of Exhaustible Natural Resources," Energies, MDPI, vol. 13(24), pages 1-20, December.
    2. Di Bartolomeo, Giovanni & Saltari, Enrico & Semmler, Willi, 2019. "The effects of political short-termism on transitions induced by pollution regulations," EconStor Preprints 200143, ZBW - Leibniz Information Centre for Economics.
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    7. Malcolm, Newman & Aggarwal, Raj K., 2015. "The impact of multiple lightning strokes on the energy absorbed by MOV surge arresters in wind farms during direct lightning strikes," Renewable Energy, Elsevier, vol. 83(C), pages 1305-1314.
    8. Julia M. Puaschunder, 2021. "Climate Growth Theory," RAIS Conference Proceedings 2021 0084, Research Association for Interdisciplinary Studies.
    9. Julia M. Puaschunder, 2021. "Climate Stabilization Taxation-and-Bonds Strategy Adjusted for Consumption," RAIS Conference Proceedings 2021 0145, Research Association for Interdisciplinary Studies.
    10. Di Bartolomeo Giovanni & Saltari Enrico & Semmler Willi, 2017. "Inattention and pollution regulation policies," wp.comunite 00130, Department of Communication, University of Teramo.

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    More about this item

    Keywords

    Non-renewable resource; Fossil fuel; Dynamic decision theory; Nonlinear Model Predictive Control;
    All these keywords.

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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