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CO 2 emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies

Author

Listed:
  • Nico Bauer

    (PIK - Potsdam Institute for Climate Impact Research)

  • Valentina Bosetti

    (Dipartimento di Economia - Università Bocconi)

  • Meriem Hamdi-Cherif

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Alban Kitous

    (IPTS - JRC Institute for Prospective Technological Studies - JRC - European Commission - Joint Research Centre [Seville])

  • David Mccollum

    (IIASA - International Institute for Applied Systems Analysis [Laxenburg])

  • Aurélie Méjean

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Shilpa Rao

    (IIASA - International Institute for Applied Systems Analysis [Laxenburg])

  • Hal Turton

    (PSI - Paul Scherrer Institute)

  • Leonidas Paroussos

    (NTUA - National Technical University of Athens [Athens])

  • Shuichi Ashina

    (NIES - National Institute for Environmental Studies)

  • Katherine Calvin

    (Joint Global Change Research Institute - PNNL - Pacific Northwest National Laboratory - University of Maryland [College Park] - University of Maryland System)

  • Kenichi Wada

    (NIES - National Institute for Environmental Studies)

  • Detlef van Vuuren

    (Universiteit Utrecht / Utrecht University [Utrecht])

Abstract

This paper explores a multi-model scenario ensemble to assess the impacts of idealized and non-idealized climate change stabilization policies on fossil fuel markets. Under idealized conditions climate policies significantly reduce coal use in the short-and long-term. Reductions in oil and gas use are much smaller, particularly until 2030, but revenues decrease much more because oil and gas prices are higher than coal prices. A first deviation from optimal transition pathways is delayed action that relaxes global emission targets until 2030 in accordance with the Copenhagen pledges. Fossil fuel markets revert back to the no-policy case: though coal use increases strongest, revenue gains are higher for oil and gas. To balance the carbon budget over the 21st century, the long-term reallocation of fossil fuels is significantly larger—twice and more— than the short-term distortion. This amplifying effect results from coal lock-in and inter-fuel substitution effects to balance the full-century carbon budget. The second deviation from the optimal transition pathway relaxes the global participation assumption. The result here is less clear-cut across models, as we find carbon leakage effects ranging from positive to negative because trade and substitution patterns of coal, oil, and gas differ across models. In summary, distortions of fossil fuel markets resulting from relaxed short-term global emission targets are more important and less uncertain than the issue of carbon leakage from early mover action.

Suggested Citation

  • Nico Bauer & Valentina Bosetti & Meriem Hamdi-Cherif & Alban Kitous & David Mccollum & Aurélie Méjean & Shilpa Rao & Hal Turton & Leonidas Paroussos & Shuichi Ashina & Katherine Calvin & Kenichi Wada , 2015. "CO 2 emission mitigation and fossil fuel markets: Dynamic and international aspects of climate policies," Post-Print hal-01586814, HAL.
  • Handle: RePEc:hal:journl:hal-01586814
    DOI: 10.1016/j.techfore.2013.09.009
    Note: View the original document on HAL open archive server: https://hal.science/hal-01586814
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    22. Zhu, Lin & Cunningham, Scott W., 2022. "Unveiling the knowledge structure of technological forecasting and social change (1969–2020) through an NMF-based hierarchical topic model," Technological Forecasting and Social Change, Elsevier, vol. 174(C).

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