Climate Policy And Petroleum Depletion
Khanna, Neha; Chapman, Duane
This paper extends the Nordhaus DICE model to include the demands for coal, oil, and natural gas. These demands depend on own price, prices of substitute fuels, per capita income, and population. An augmented Hotelling model captures the effect of depleting oil resources. A methodological advantage of including price, income, and population sensitive energy demand functions is that it allows substitution possibilities in the 'production' of emissions. Furthermore, it allows the analysis of energy tax regimes in an environment of growing world population and income, non-decreasing energy and carbon intensity, and declining petroleum availability.
WP 1997-01 January 1997
Charles H. Dyson School of Applied Economics and Management, Cornell University
backstop; climate change; control rate; emissions; energy intensity; energy tax; finite resource; fossil fuel; fuel substitution; optimal growth; prices; resource depletion