Facebook LinkedIn Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Technology Treaties and Fossil-Fuels Extraction

We consider some unintended effects of a technology treaty to increase the (stochastic) possibility of developing an energy alternative to fossil fuels which, when available, makes fossil fuels redundant. One implication of such a treaty is to increase the incentives for fossil-fuels producers to extract fossil fuels existing in given quantity more rapidly, under competition when the equilibrium price path for fossil fuels follows Hotelling�s rule. When the treaty may result in the new technology being immediately available, the expected resource extraction path is accelerated for an initial period, in simulations for 510 years, despite fossil fuels being phased out when the new technology appears. When there is a minimum (10-year) lag from treaty signing to technology implementation, expected extraction is speeded up for a longer period, 12-15 years. We discuss the implications of such treaties for global carbon emissions, which are not necessarily positive.

Purchase ( $25 )

Energy Specializations: Coal – Policy and Regulation; Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Environment – Policy and Regulation

JEL Codes:
Q53 - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Q54 - Climate; Natural Disasters and Their Management; Global Warming
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Technology treaties, Kyoto Protocol, Fossil-fuel extraction, Carbon emissions

DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No4-6

Published in Volume 28, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.