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What about Coal?: Interactions between Climate Policies and the Global Steam Coal Market until 2030

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  • Clemens Haftendorn
  • Claudia Kemfert
  • Franziska Holz

Abstract

Because of economic growth and a strong increase in global energy demand the demand for fossil fuels and therefore also greenhouse gas emissions are increasing, although climate policy should lead to the opposite effect. The coal market is of special relevance as coal is available in many countries and often their first choice to meet energy demand. In this paper we assess possible interactions between climate policies and the global steam coal market. Possible market adjustments between demand centers through market effects are investigated with a numerical model of the global steam coal market until 2030: the "COALMOD-World" model. The COALMOD-World model is an equilibrium model that computes future trade flows, infrastructure investments and prices until 2030. We investigate three specific designs of climate policy: a unilateral European climate policy, an Indonesian export-limiting policy and a carbon capture and storage (CCS) fast-roll out policy in the broader context of climate policy and market constraints. We find that market adjustment effects in the coal market can have significant positive and negative impacts on the effectiveness of climate policies.

Suggested Citation

  • Clemens Haftendorn & Claudia Kemfert & Franziska Holz, 2011. "What about Coal?: Interactions between Climate Policies and the Global Steam Coal Market until 2030," Discussion Papers of DIW Berlin 1146, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1146
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Pangan, Melboy & Mulder, Machiel, 2016. "Influence of Environmental Policy and Market Forces on Coal-fired Power Plants," Research Report 16017-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Paulus, Moritz, 2012. "How are investment decisions in the steam coal market affected by demand uncertainty and buyer-side market power?," EWI Working Papers 2012-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    3. Kim Collins & Roman Mendelevitch, 2015. "Leaving Coal Unburned: Options for Demand-Side and Supply-Side Policies," DIW Roundup: Politik im Fokus 87, DIW Berlin, German Institute for Economic Research.
    4. Rioux, Bertrand & Galkin, Philipp & Murphy, Frederic & Pierru, Axel, 2016. "Economic impacts of debottlenecking congestion in the Chinese coal supply chain," Energy Economics, Elsevier, vol. 60(C), pages 387-399.
    5. Franziska Holz & Clemens Haftendorn & Roman Mendelevitch & Christian von Hirschhausen, 2016. "A Model of the International Steam Coal Market (COALMOD-World)," Data Documentation 85, DIW Berlin, German Institute for Economic Research.
    6. Clemens Haftendorn & Franziska Holz & Claudia Kemfert & Christian von Hirschhausen, 2013. "Global steam coal markets until 2030: perspectives on production, trade and consumption under increasing carbon constraints," Chapters,in: Handbook on Energy and Climate Change, chapter 4, pages 103-122 Edward Elgar Publishing.

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    Keywords

    climate policy; future coal production; energy; numerical modeling; international trade;

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