| ID | 098593 |
| Title Proper | Uncertain long-run emissions targets, CO2 price and global energy transition |
| Other Title Information | a general equilibrium approach |
| Language | ENG |
| Author | Durand-Lasserve, Olivier ; Pierru, Axel ; Smeers, Yves |
| Publication | 2010. |
| Summary / Abstract (Note) | The persistent uncertainty about mid-century CO2 emissions targets is likely to affect not only the technological choices that energy-producing firms will make in the future but also their current investment decisions. We illustrate this effect on CO2 price and global energy transition within a MERGE-type general-equilibrium model framework, by considering simple stochastic CO2 policy scenarios. In these scenarios, economic agents know that credible long-run CO2 emissions targets will be set in 2020, with two possible outcomes: either a "hard cap" or a "soft cap". Each scenario is characterized by the relative probabilities of both possible caps. We derive consistent stochastic trajectories-with two branches after 2020-for prices and quantities of energy commodities and CO2 emissions permits. The impact of uncertain long-run CO2 emissions targets on prices and technological trajectories is discussed. In addition, a simple marginal approach allows us to analyze the Hotelling rule with risk premia observed for certain scenarios. |
| `In' analytical Note | Energy Policy Vol. 38, No. 9; Sep 2010: p.5108-5122 |
| Journal Source | Energy Policy Vol. 38, No. 9; Sep 2010: p.5108-5122 |
| Key Words | CO2 ; Uncertainty ; Energy Transition |