Global competition dynamics of fossil fuels and renewable energy under climate policies and peak oil: A behavioural model
Zeppini, Paolo (University of Bath. Department of Economics)
Van den Bergh, Jeroen C. J. M. (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)

Date:	2020
Abstract:	We develop a stochastic decision model to analyse the global competitive dynamics of fossil fuels and renewable energy. It describes coal, oil/gas, solar and wind. These differ not only in pollution intensities but also in profitability and innovation potential. The model accounts for the effect of learning curves, path-dependence and climate policies. Adoption shares endogenously affect agents' utility through increasing returns to adoption, learning, and a 'peak oil' capacity constraint. We find that peak oil induces a transition to coal rather than renewable energy, which worsens climate change. By introducing climate policies - such as a carbon tax, market adoption or R&D subsidies for renewables, and eliminating existing subsidies for fossil fuels - we identify potential transition patterns to a low-carbon energy system. Model analysis clarifies two main features of climate policies: which ones solve the climate problem, i. e. do not surpass the critical carbon budget; and how uncertain or variable are final market shares of energy sources.
Grants:	European Commission 741087
Note:	Unidad de excelencia María de Maeztu CEX2019-000940-M
Rights:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, i la comunicació pública de l'obra, sempre que no sigui amb finalitats comercials, i sempre que es reconegui l'autoria de l'obra original. No es permet la creació d'obres derivades.
Language:	Anglès
Document:	Article ; recerca ; Versió acceptada per publicar
Subject:	Climate change ; Energy policy ; Externalities ; Learning ; Peak oil
Published in:	Energy policy, Vol. 136 (January 2020) , art. 110907, ISSN 0301-4215

DOI: 10.1016/j.enpol.2019.110907

Postprint 43 p, 6.6 MB

The record appears in these collections:
Research literature > UAB research groups literature > Research Centres and Groups (research output) > Experimental sciences > Institut de Ciència i Tecnologia Ambientals (ICTA) > Environmental and Climate Economics (ECE)
Articles > Research articles
Articles > Published articles