Closing wells: Fossil development and abandonment in the energy transition
van den Bijgaart,Inge Rodriguez,Mauricio
van den Bijgaart,Inge
Rodriguez,Mauricio
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.
Description
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.
Date
2023-08
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Research Projects
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Keywords
Carbon budget, Energy transition, Fossil development, Nonrenewable resources, Renewable energy, Stranded assets, SDG 7 - Affordable and Clean Energy
Citation
van den Bijgaart, I & Rodriguez, M 2023, 'Closing wells : Fossil development and abandonment in the energy transition', Resource and Energy Economics, vol. 74, 101387. https://doi.org/10.1016/j.reseneeco.2023.101387