Energy

Lukas Boer, Andrea Pescatori, Martin Stuermer, Nico Valckx, 05 November 2021

Low greenhouse gas technologies require more metals than their fossil fuel-based counterparts. This column estimates supply elasticities and pins down the price impact of the energy transition on the metals markets. The results show that prices for copper, nickel, cobalt, and lithium could reach historical peaks for an unprecedented, sustained period in a net zero emissions scenario. The total value of production could rise more than four-fold for the period 2021-2040, rivaling the total value of crude oil production.

Andrea Tesei, Jørgen Juel Andersen, Frode Martin Nordvik, 26 October 2021

Violent conflict often centres around the control of critical resources, including fossil fuels such as oil. This column explores how the location of oil reserves can affect the likelihood of a particular tension descending into widespread civil violence or war. Using a Norwegian data set, the authors show that the presence of onshore oil has a greater effect than offshore oil in driving conflict. Where a resource is relatively straightforward to access (i.e. on land as opposed to out at sea), rebel groups will be more easily able to reap the benefits of taking control through violence.

Maria Chiara Paoli, Rick van der Ploeg, 04 October 2021

Despite climate justice advocates continuing to highlight climate inequities along racial, gender and class dimensions and policymakers’ vague statements in support of a ‘just transition’, there are few concrete plans. This column uses microsimulations of household behaviour from UK data to investigate the efficiency and equity impacts of different ways of recycling carbon tax revenue, focusing on both horizontal and vertical equity dimensions, and their implications for political feasibility. The authors find that rebating carbon tax revenues through social security payments renders the policy progressive and benefits the highest share of households in their sample.

Christian Gollier, 06 April 2021

Any global temperature target must be translated into an intertemporal carbon budget and an associated cost-efficient carbon price schedule. This column uses an intertemporal asset-pricing approach to examine the impact of uncertainties surrounding economic growth and abatement technologies on the dynamics of efficient carbon prices. It finds evidence of a positive carbon risk premium and suggests an efficient growth rate of expected carbon prices of around 4% plus inflation. This is lower than the growth rates found in many public reports and integrated assessment models, and justifies a higher carbon price today in order to satisfy the carbon budget.

Ralph De Haas, Ralf Martin, Mirabelle Muûls, Helena Schweiger, 19 March 2021

Many countries are striving for net-zero carbon emissions by 2050, requiring massive investments over the next decades. But many companies, especially smaller ones, will not be able or willing to invest in cleaner technologies. This column explores how organisational constraints can hold back the green transition of firms in less-developed economies. The findings reveal how financial crises can slow down the decarbonisation of economic production and caution against excessive optimism about the potential green benefits of the current economic slowdown, which – like any recession – has led to temporary reductions in emissions.

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