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

Listed author(s):
  • Nico Bauer

    (Potsdam Institute for Climate Impact Research - Telegraphenberg C4)

  • 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

    (European Commission (JRC-IPTS))

  • 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 Institut)

  • Leonidas Paroussos

    (National Technical University of 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])

  • Kenichi Wada

    (NIES - National Institute for Environmental Studies)

  • Detlef Van Vuuren

    (Utrecht University [Utrecht])

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.

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File URL: https://hal.archives-ouvertes.fr/hal-01586814/document
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Paper provided by HAL in its series Post-Print with number hal-01586814.

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Date of creation: 2015
Publication status: Published in Technological Forecasting and Social Change, Elsevier, 2015, 90 Part A, pp.243-256. 〈10.1016/j.techfore.2013.09.009〉
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.archives-ouvertes.fr/hal-01586814
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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