The project investigates the relation between fossil resource markets and climate change. We focus on the resources coal, oil, and natural gas. The issues at heart of this project are climate policies and their effect on supply and demand in energy resource markets, in particular inter-temporal and interregional carbon leakage. This requires in a first step the analysis of the resource markets and especially the suppliers' behavior, before investigating the effectiveness of climate change mitigation measures.
The following issues have to be considered: the strategic behavior of resource owners, but also supply shifts and market effects due to a local demand reduction for fossil fuels induced by local climate policies that may be overcompensated by demand increases in other countries. Such theories are currently discussed in the economic literature and shall be verified empirically in the project. Attempts to estimate the long-term fossil resources base and long term extraction costs have been in the past but an updated and more refined data collection effort is needed. We will apply advanced econometric and numerical modeling methods to better understand the link between these sectors and climate policies, both in Europe and worldwide.
The project is carried out jointly by DIW Berlin (focus on data, numerical modeling, events) and Potsdam University (project lead, focus on empirical analyses, publications). The project is part of the joint research program "Resource markets and policies" carried out by DIW Berlin, Potsdam University and TU Berlin.
This project is part of the BMBF funding priority "Economics of Climate Change" by BMBF/DLR (www.ptdlr-klimaundumwelt.de/en/773.php).
The final workshop of the RESOURCES-projects took place on December 14th.