Estimating the Emissions Reductions from Supply-side Fossil Fuel Interventions
This working paper estimates the effects of retiring highly emitting fossil fuel assets and finds emissions reductions in the order of 40–50 percent for each barrel curtailed.
Supply-side interventions that retire highly emitting fossil fuel assets have received increased attention from policymakers and private actors alike. Yet concerns about market leakage—wherein reduced supply from one source is partially offset by increased production from other sources—have raised questions about how much emissions reductions they can achieve. In this paper, we estimate the effects of these supply-side interventions on global emissions, accounting for both market leakage as well as the relative greenhouse gas (GHG) intensity of different sources of supply. We account for uncertainty in market leakage rates and the emissions intensities of the curtailed and substitute sources of supply through a Monte Carlo analysis, drawing on supply and demand elasticities from the economics literature and emissions intensity data from the state-of-the-art Oil Climate Index plus Gas (OCI+) dataset on 586 oil and gas fields around the world. We find that the life-cycle emissions reductions from supply-side interventions are on the order of 40–50 percent of the gross life-cycle emissions of each barrel curtailed, depending on the relative emissions intensity of the curtailed and substitute sources of supply. Further, targeting the most emissions-intensive sources of oil supply could achieve yet further emissions reductions. How one compares methane and CO2 emissions also has important consequences for which sources to target.
Brian C. Prest
Fellow; Director, Social Cost of Carbon Initiative
Brian Prest is an economist and fellow at Resources for the Future specializing in climate change, oil and gas, and energy economics.
North Carolina State University
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