Oil and natural gas prices and greenhouse gas emission mitigation
The hikes in hydrocarbon prices during the last years have lead to concern about investment choices in the energy system and uncertainty about the costs for mitigation of greenhouse gas emissions. On the one hand, high prices of oil and natural gas increase the use of coal; on the other hand, the cost difference between fossil-based energy and non-carbon energy options decreases. We use the global energy model TIMER to explore the energy system impacts of exogenously forced low, medium and high hydrocarbon price scenarios, with and without climate policy. We find that without climate policy high hydrocarbon prices drive electricity production from natural gas to coal. In the transport sector, high hydrocarbon prices lead to the introduction of alternative fuels, especially biofuels and coal-based hydrogen. This leads to increased emissions of CO2. With climate policy, high hydrocarbon prices cause a shift in electricity production from a dominant position of natural gas with carbon capture and sequestration (CCS) to coal-with-CCS, nuclear and wind. In the transport sector, the introduction of hydrogen opens up the possibility of CCS, leading to a higher mitigation potential at the same costs. In a more dynamic simulation of carbon price and oil price interaction the effects might be dampened somewhat.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rout, Ullash K. & Akimoto, Keigo & Sano, Fuminori & Oda, Junichiro & Homma, Takashi & Tomoda, Toshimasa, 2008. "Impact assessment of the increase in fossil fuel prices on the global energy system, with and without CO2 concentration stabilization," Energy Policy, Elsevier, vol. 36(9), pages 3477-3484, September.
- Meng, Q.Y. & Bentley, R.W., 2008. "Global oil peaking: Responding to the case for ‘abundant supplies of oil’," Energy, Elsevier, vol. 33(8), pages 1179-1184.
- Vielle, Marc & Viguier, Laurent, 2007. "On the climate change effects of high oil prices," Energy Policy, Elsevier, vol. 35(2), pages 844-849, February.
- Tsatskin, Alexander & Balaban, Oded, 2008. "Peak oil in the light of oil formation theories," Energy Policy, Elsevier, vol. 36(6), pages 1826-1828, June.
- Roberto F. Aguilera & Roderick G. Eggert & Gustavo Lagos C.C. & John E. Tilton, 2009. "Depletion and the Future Availability of Petroleum Resources," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 141-174.
- Bernabe, Araceli & Martina, Esteban & Alvarez-Ramirez, Jose & Ibarra-Valdez, Carlos, 2004. "A multi-model approach for describing crude oil price dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 338(3), pages 567-584.
- de Castro, Carlos & Miguel, Luis Javier & Mediavilla, Margarita, 2009. "The role of non conventional oil in the attenuation of peak oil," Energy Policy, Elsevier, vol. 37(5), pages 1825-1833, May.
- van Ruijven, Bas & Hari, Lakshmikanth & van Vuuren, Detlef P. & de Vries, Bert, 2008. "The potential role of hydrogen energy in India and Western Europe," Energy Policy, Elsevier, vol. 36(5), pages 1649-1665, May.
- Kjärstad, Jan & Johnsson, Filip, 2009. "Resources and future supply of oil," Energy Policy, Elsevier, vol. 37(2), pages 441-464, February.
- Kerschner, Christian & Hubacek, Klaus, 2009. "Assessing the suitability of input–output analysis for enhancing our understanding of potential economic effects of Peak Oil," Energy, Elsevier, vol. 34(3), pages 284-290.
- Dahl, Carol & Duggan, Thomas E., 1998. "Survey of price elasticities from economic exploration models of US oil and gas supply," Journal of Energy Finance & Development, Elsevier, vol. 3(2), pages 129-169.
- Krey, Volker & Martinsen, Dag & Wagner, Hermann-Josef, 2007. "Effects of stochastic energy prices on long-term energy-economic scenarios," Energy, Elsevier, vol. 32(12), pages 2340-2349.
- van Vuuren, Detlef P. & Hoogwijk, Monique & Barker, Terry & Riahi, Keywan & Boeters, Stefan & Chateau, Jean & Scrieciu, Serban & van Vliet, Jasper & Masui, Toshihiko & Blok, Kornelis & Blomen, Eliane , 2009. "Comparison of top-down and bottom-up estimates of sectoral and regional greenhouse gas emission reduction potentials," Energy Policy, Elsevier, vol. 37(12), pages 5125-5139, December.
- Dermot Gately & Hiliard G. Huntington, 2002.
"The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 1), pages 19-55.
- Gately, D. & Huntington, H.G., 2001. "The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand," Working Papers 01-01, C.V. Starr Center for Applied Economics, New York University.
- Kaufmann, Robert K. & Shiers, Laura D., 2008. "Alternatives to conventional crude oil: When, how quickly, and market driven?," Ecological Economics, Elsevier, vol. 67(3), pages 405-411, October.
- Wirl, Franz, 2008. "Why do oil prices jump (or fall)?," Energy Policy, Elsevier, vol. 36(3), pages 1029-1043, March.
- Sue Wing, Ian, 2008. "Explaining the declining energy intensity of the U.S. economy," Resource and Energy Economics, Elsevier, vol. 30(1), pages 21-49, January.
- Zhao, Lin & Feng, Lianyong & Hall, Charles A.S., 2009. "Is peakoilism coming?," Energy Policy, Elsevier, vol. 37(6), pages 2136-2138, June.
- Szklo, Alexandre & Schaeffer, Roberto, 2006. "Alternative energy sources or integrated alternative energy systems? Oil as a modern lance of Peleus for the energy transition," Energy, Elsevier, vol. 31(14), pages 2513-2522.
- van Vuuren, Detlef P. & de Vries, Bert & Eickhout, Bas & Kram, Tom, 2004. "Responses to technology and taxes in a simulated world," Energy Economics, Elsevier, vol. 26(4), pages 579-601, July.
- D. P. van Vuuren & H.J.M. de Vries, 2001. "Mitigation scenarios in a world oriented at sustainable development: the role of technology, efficiency and timing," Climate Policy, Taylor & Francis Journals, vol. 1(2), pages 189-210, June. Full references (including those not matched with items on IDEAS)