On the global economic potentials and marginal costs of non-renewable resources and the price of energy commodities
A model is presented in this work for simulating endogenously the evolution of the marginal costs of production of energy carriers from non-renewable resources, their consumption, depletion pathways and timescales. Such marginal costs can be used to simulate the long term average price formation of energy commodities. Drawing on previous work where a global database of energy resource economic potentials was constructed, this work uses cost distributions of non-renewable resources in order to evaluate global flows of energy commodities. A mathematical framework is given to calculate endogenous flows of energy resources given an exogenous commodity price path. This framework can be used in reverse in order to calculate an exogenous marginal cost of production of energy carriers given an exogenous carrier demand. Using rigid price inelastic assumptions independent of the economy, these two approaches generate limiting scenarios that depict extreme use of natural resources. This is useful to characterise the current state and possible uses of remaining non-renewable resources such as fossil fuels and natural uranium. The theory is however designed for use within economic or technology models that allow technology substitutions. In this work, it is implemented in the global power sector model FTT:Power. Policy implications are given.
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.:
- Jonathan Kohler, Terry Barker, Dennis Anderson and Haoran Pan, 2006. "Combining Energy Technology Dynamics and Macroeconometrics: The E3MG Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 113-134.
- J. -F. Mercure, 2013. "An age structured demographic theory of technological change," Papers 1304.3602, arXiv.org, revised Nov 2014.
- Terry Barker and S. Serban Scrieciu, 2010. "Modeling Low Climate Stabilization with E3MG: Towards a 'New Economics' Approach to Simulating Energy-Environment-Economy System Dynamics," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
- Murray Carlson & Zeigham Khokher & Sheridan Titman, 2007.
"Equilibrium Exhaustible Resource Price Dynamics,"
Journal of Finance,
American Finance Association, vol. 62(4), pages 1663-1703, 08.
- Bentley, R.W. & Mannan, S.A. & Wheeler, S.J., 2007. "Assessing the date of the global oil peak: The need to use 2P reserves," Energy Policy, Elsevier, vol. 35(12), pages 6364-6382, December.
- Sorrell, Steve & Miller, Richard & Bentley, Roger & Speirs, Jamie, 2010. "Oil futures: A comparison of global supply forecasts," Energy Policy, Elsevier, vol. 38(9), pages 4990-5003, September.
- Gallo, Andres & Mason, Paul & Shapiro, Steve & Fabritius, Michael, 2010. "What is behind the increase in oil prices? Analyzing oil consumption and supply relationship with oil price," Energy, Elsevier, vol. 35(10), pages 4126-4141.
- Takeshita, Takayuki, 2011. "Competitiveness, role, and impact of microalgal biodiesel in the global energy future," Applied Energy, Elsevier, vol. 88(10), pages 3481-3491.
- Reynolds, Douglas B., 1999. "The mineral economy: how prices and costs can falsely signal decreasing scarcity," Ecological Economics, Elsevier, vol. 31(1), pages 155-166, October.
- de Vries, Bert J.M. & van Vuuren, Detlef P. & Hoogwijk, Monique M., 2007. "Renewable energy sources: Their global potential for the first-half of the 21st century at a global level: An integrated approach," Energy Policy, Elsevier, vol. 35(4), pages 2590-2610, April.
- Reynolds, Douglas B. & Baek, Jungho, 2012. "Much ado about Hotelling: Beware the ides of Hubbert," Energy Economics, Elsevier, vol. 34(1), pages 162-170.
- Rehrl, Tobias & Friedrich, Rainer, 2006. "Modelling long-term oil price and extraction with a Hubbert approach: The LOPEX model," Energy Policy, Elsevier, vol. 34(15), pages 2413-2428, October.
- Jean-Francois Mercure, 2012. "On the changeover timescales of technology transitions and induced efficiency changes: an overarching theory," Papers 1209.0424, arXiv.org.
- Zafirakis, Dimitrios & Chalvatzis, Konstantinos J. & Baiocchi, Giovanni & Daskalakis, George, 2013. "Modeling of financial incentives for investments in energy storage systems that promote the large-scale integration of wind energy," Applied Energy, Elsevier, vol. 105(C), pages 138-154.
- Donald W. Jones, Paul N. Leiby and Inja K. Paik, 2004. "Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-32.
- Terry Barker, Haoran Pan, Jonathan Kohler, Rachel Warren, and Sarah Winne, 2006. "Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 241-258.
- Grubler, Arnulf, 2012. "Energy transitions research: Insights and cautionary tales," Energy Policy, Elsevier, vol. 50(C), pages 8-16.
- Grubler, Arnulf & Nakicenovic, Nebojsa & Victor, David G., 1999. "Dynamics of energy technologies and global change," Energy Policy, Elsevier, vol. 27(5), pages 247-280, May.
- Mercure, Jean-François & Salas, Pablo, 2012.
"An assessement of global energy resource economic potentials,"
Elsevier, vol. 46(1), pages 322-336.
- J. F. Mercure & P. Salas, 2012. "An assessement of global energy resource economic potentials," Papers 1205.4693, arXiv.org, revised Aug 2012.
- Mercure, Jean-François, 2012. "FTT:Power : A global model of the power sector with induced technological change and natural resource depletion," Energy Policy, Elsevier, vol. 48(C), pages 799-811.
- Hoogwijk, Monique & de Vries, Bert & Turkenburg, Wim, 2004. "Assessment of the global and regional geographical, technical and economic potential of onshore wind energy," Energy Economics, Elsevier, vol. 26(5), pages 889-919, September.
- Jonathan Kohler, Michael Grubb, David Popp and Ottmar Edenhofer , 2006. "The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 17-56.
- Norgaard, Richard B., 1990. "Economic indicators of resource scarcity: A critical essay," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 19-25, July.
- Terry Barker & Annela Anger & Unnada Chewpreecha & Hector Pollitt, 2012. "A new economics approach to modelling policies to achieve global 2020 targets for climate stabilisation," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(2), pages 205-221, October.
- Ottmar Edenhofer, Kai Lessmann, Claudia Kemfert, Michael Grubb and Jonathan Kohler , 2006. "Induced Technological Change: Exploring its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the Innovation Modeling Comparison Project," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 57-108.
- van Vuuren, Detlef P. & van Vliet, Jasper & Stehfest, Elke, 2009. "Future bio-energy potential under various natural constraints," Energy Policy, Elsevier, vol. 37(11), pages 4220-4230, November.
- Ottmar Edenhofer , Brigitte Knopf, Terry Barker, Lavinia Baumstark, Elie Bellevrat, Bertrand Chateau, Patrick Criqui, Morna Isaac, Alban Kitous, Socrates Kypreos, Marian Leimbach, Kai Lessmann, Bertra, 2010. "The Economics of Low Stabilization: Model Comparison of Mitigation Strategies and Costs," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
- Frank M. Bass, 1969. "A New Product Growth for Model Consumer Durables," Management Science, INFORMS, vol. 15(5), pages 215-227, January.
- Daniel J.A. Johansson & Christian Azar & Kristian Lindgren & Tobias A. Persson , 2009. "OPEC Strategies and Oil Rent in a Climate Conscious World," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 23-50.
When requesting a correction, please mention this item's handle: RePEc:arx:papers:1209.0708. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators)
If references are entirely missing, you can add them using this form.