Climate Policy and the Optimal Extraction of High- and Low-Carbon Fossil Fuels

Arbeitspapier

We study how restricting CO2 emissions affects resource prices and depletion over time. We use a Hotelling-style model with two non-renewable fossil fuels that differ in their carbon content (e.g. coal and natural gas) and in addition are imperfect substitutes in final good production. We show that an economy facing a CO2 flow-constraint may substitute towards the relatively dirty input. As the economy tries to maximise output per unit of emissions it is not only carbon content that matters: productivity matters as well. With an announced constraint the economy first substitutes towards the less productive input such that more of the productive input is available when constrained. Preliminary empirical results suggest that it is cost-effective to substitute away from dirty coal to cleaner oil or gas, but to substitute from natural gas towards the dirtier input oil.

Objekt anzeigen

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Nota di Lavoro ; No. 83.2007

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Nonrenewable Resources and Conservation: Demand and Supply; Prices ; Energy and the Macroeconomy
• Thema: Climate Policy ; Non-Renewable Resources ; Input Substitution ; Klimaschutz ; Fossiler Energieträger ; Luftverunreinigung ; Kohlendioxid ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): van der Werf, Edwin ; Smulders, Sjak
• Ereignis: Veröffentlichung
• (wer): Fondazione Eni Enrico Mattei (FEEM)
• (wo): Milano
• (wann): 2007

Weitere Informationen

• Handle: http://hdl.handle.net/10419/73929