{"title":"Closing wells: Fossil development and abandonment in the energy transition","authors":"Inge van den Bijgaart , Mauricio Rodriguez","doi":"10.1016/j.reseneeco.2023.101387","DOIUrl":null,"url":null,"abstract":"<div><p>Despite ambitious climate goals and already substantial stocks of developed fossil energy reserves, development of new fossil energy reserves continues to be high. This raises concerns, as it reinforces the fossil industry’s opportunities and incentives to continue extraction, and may necessitate abandonment of developed fossil reserves to meet climate targets. In this paper, we analyze the energy transition, considering fossil development activities. We provide conditions for when the fossil industry will abandon reserves, and establish that continued development of fossil resources is not incompatible with abandoning developed reserves. The first-best implementation of a carbon budget involves reserve abandonment, and thus development that pushes developed reserves in excess of the remaining budget. A quantitative assessment reveals that a volume equal to 9–19% of current oil and gas reserves are optimally abandoned, and that, even under a 1.5<sup>∘</sup><em>C</em> warming target, development of new reserves is justified for another decade.</p></div>","PeriodicalId":47952,"journal":{"name":"Resource and Energy Economics","volume":"74 ","pages":"Article 101387"},"PeriodicalIF":2.6000,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Resource and Energy Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0928765523000428","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Despite ambitious climate goals and already substantial stocks of developed fossil energy reserves, development of new fossil energy reserves continues to be high. This raises concerns, as it reinforces the fossil industry’s opportunities and incentives to continue extraction, and may necessitate abandonment of developed fossil reserves to meet climate targets. In this paper, we analyze the energy transition, considering fossil development activities. We provide conditions for when the fossil industry will abandon reserves, and establish that continued development of fossil resources is not incompatible with abandoning developed reserves. The first-best implementation of a carbon budget involves reserve abandonment, and thus development that pushes developed reserves in excess of the remaining budget. A quantitative assessment reveals that a volume equal to 9–19% of current oil and gas reserves are optimally abandoned, and that, even under a 1.5∘C warming target, development of new reserves is justified for another decade.
期刊介绍:
Resource and Energy Economics provides a forum for high level economic analysis of utilization and development of the earth natural resources. The subject matter encompasses questions of optimal production and consumption affecting energy, minerals, land, air and water, and includes analysis of firm and industry behavior, environmental issues and public policies. Implications for both developed and developing countries are of concern. The journal publishes high quality papers for an international audience. Innovative energy, resource and environmental analyses, including theoretical models and empirical studies are appropriate for publication in Resource and Energy Economics.