Coal, Oil and "backstop" Technologies
The issue of carbon leakage can be interpreted from the perspective of the reliance of society on coal, oil, and "backstop" (less polluting) technologies, e.g., biomass. This is based on the theory of nonrenewable resources (Goldemberg et al., 1996, pp. 27-28). The potential emissions from coal, oil and gas is limited by the supply of these nonrenewable resources. To a first approximation, the total emissions from oil and gas is fixed, and the total load of carbon in the atmosphere is determined by coal usage.
A policy that, for example, sets a carbon tax only in developed countries might lead to leakage of emissions to developing countries. However, a negative leakage (i.e., leakage having the effect of reducing emissions) could also occur due to a lowering in demand and price for oil and gas. This might lead coal-rich countries to use less coal and more oil and gas, thus lowering their emissions (Goldemberg et al., 1996, pp. 27-28). While this is of short-term benefit, it reduces the insurance provided by limiting the consumption of oil and gas. The insurance is against the possibility of delayed arrival of backstop technologies. If the arrival of backstop technologies is delayed, the substitution of coal for oil and gas might have no long-term benefit. If the backstop technology arrives earlier, then the issue of substitution becomes unimportant. In terms of climate policy, the issue of substitution means that long-term leakage needs to be considered, and not just short-term leakage (Goldemberg et al., 1996, p. 28).
Read more about this topic: Carbon Leakage
Famous quotes containing the word oil:
“As artists they’re rot, but as providers they’re oil wells; they gush. Norris said she never wrote a story unless it was fun to do. I understand Ferber whistles at her typewriter. And there was that poor sucker Flaubert rolling around on his floor for three days looking for the right word.”
—Dorothy Parker (1893–1967)