Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204413 
Year of Publication: 
2017
Series/Report no.: 
IFRO Working Paper No. 2017/09
Publisher: 
University of Copenhagen, Department of Food and Resource Economics (IFRO), Copenhagen
Abstract: 
Natural gas is hoped to effectively help shale gas producing regions meet their carbon emission reduction commitments. We examine an open economy that produces both gas and another, more carbon intensive fuel like coal. In presence of two carbon energy sources, the analysis sharply contrasts with the standard single-energy case in which leakage is less than 100%: We show that, in general, an economy that relies on domestic gas to meet its emission commitment may contribute to increase global emissions. Indeed, gas production releases coal that is exported instead of being consumed domestically, potentially increasing emissions in the rest of the world. In this new context, we establish testable conditions as to whether a governmental emission reduction commitment warrants the domestic exploitation of shale gas, and whether this unilateral strategy increases global emissions. We also characterize the extent to which this unilateral strategy makes the rest of the world's emission commitment more difficult to meet. Finally, we show how our results apply to the case of the US.
Subjects: 
Unilateral climate policy
Carbon emission reduction
Shale gas
Intermediate energy
Gas-coal substitution
Coal exports
Leakage
US policy
Policy counter-effectiveness
JEL: 
Q41
Q58
H73
F18
Document Type: 
Working Paper

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