TY - JOUR
T1 - Closing wells
T2 - Fossil development and abandonment in the energy transition
AU - van den Bijgaart, Inge
AU - Rodriguez, Mauricio
N1 - Funding Information:
This paper has benefited from the comments and suggestions of many seminar and conference participants. We wish to in particular express gratitude to Reyer Gerlagh, John Hassler, Niko Jaakkola, Rick van der Ploeg, Daan van Soest and Sjak Smulders. Mauricio Rodriguez thanks the support of the Scientific Colombia Program – EFI Alliance, code 60185 , under the Contingent Recovery Agreement No. FP44842-220-2018 .
Publisher Copyright:
© 2023 Elsevier B.V.
PY - 2023/8
Y1 - 2023/8
N2 - 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.
AB - 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.
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U2 - 10.1016/j.reseneeco.2023.101387
DO - 10.1016/j.reseneeco.2023.101387
M3 - Article
AN - SCOPUS:85165120773
SN - 0928-7655
VL - 74
JO - Resource and Energy Economics
JF - Resource and Energy Economics
M1 - 101387
ER -
