Research Papers
Closing wells; fossil exploration and abandonment in the energy transition (with Inge van den Bijgaart)
CESifo Working Paper No. 8453 [latest draft here]
Despite ambitious climate goals and already substantial stocks of developed fossil energy reserves, investment in new fossil exploration and development 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 analyse the energy transition, explicitly considering fossil exploration and development activities. We provide conditions for when the fossil industry will rationally abandon reserves, and establish that continued exploration of fossil resources is not necessarily incompatible with leaving a positive share of developed reserves unextracted. We find that a first-best implementation of a carbon budget always involves such reserve abandonment, and thus exploration that pushes developed reserves in excess of the remaining budget. Our numerical simulation reveals that a volume equal to 9-19% of current oil and gas reserves are optimally abandoned, and that, even under a 1.5 degrees warming target, positive exploration of new reserves is justified for another decade.
CESifo Working Paper No. 8453 [latest draft here]
Despite ambitious climate goals and already substantial stocks of developed fossil energy reserves, investment in new fossil exploration and development 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 analyse the energy transition, explicitly considering fossil exploration and development activities. We provide conditions for when the fossil industry will rationally abandon reserves, and establish that continued exploration of fossil resources is not necessarily incompatible with leaving a positive share of developed reserves unextracted. We find that a first-best implementation of a carbon budget always involves such reserve abandonment, and thus exploration that pushes developed reserves in excess of the remaining budget. Our numerical simulation reveals that a volume equal to 9-19% of current oil and gas reserves are optimally abandoned, and that, even under a 1.5 degrees warming target, positive exploration of new reserves is justified for another decade.
Foreign climate policy and domestic industry adjustment (with Oscar Avila)
Amid weak international cooperation a significant stretch of the climate policy efforts will continue to take the form of unilateral policies. However, concerns about the competitiveness and the risk of carbon leakage limit the scope and acceptability of carbon pricing on domestic production. In this context, Border Carbon Adjustments (BCA) have gained prominence as a complement to carbon taxes. Using a trade adjustment dynamics model we investigate if, from the perspective of a small open economy (SOE), the credible implementation of a BCAs by a climate conscious coalition provides incentives for the early implementation of domestic climate policy. In particular, if the early implementation of climate policy by the SOE serves to reduce the exposure to the future implementation of BCAs by trading partners. Using the data for the Colombian economy, our results indicate that the scope for domestic climate policy is affected by whether the BCA design prescribes a tariff hike that adjusts with the emissions of the targeted sector.
Amid weak international cooperation a significant stretch of the climate policy efforts will continue to take the form of unilateral policies. However, concerns about the competitiveness and the risk of carbon leakage limit the scope and acceptability of carbon pricing on domestic production. In this context, Border Carbon Adjustments (BCA) have gained prominence as a complement to carbon taxes. Using a trade adjustment dynamics model we investigate if, from the perspective of a small open economy (SOE), the credible implementation of a BCAs by a climate conscious coalition provides incentives for the early implementation of domestic climate policy. In particular, if the early implementation of climate policy by the SOE serves to reduce the exposure to the future implementation of BCAs by trading partners. Using the data for the Colombian economy, our results indicate that the scope for domestic climate policy is affected by whether the BCA design prescribes a tariff hike that adjusts with the emissions of the targeted sector.
Work in Progress
Fossil exploration and supply side climate policy (with Inge van den Bijgaart)
Reserves, Resources, Research and Development (with Inge van den Bijgaart and Sjak Smulders)
Violence and agricultural land use: the effects of the demilitarized zone in Colombia (with Andres Garcia and Vanessa Ospina)
Repression and populism (with Juan Vargas)
Publications
2022 Dynamic resource management under weak property rights: A tale of thieves and trespassers. (with Sjak Smulders) Journal of Environmental Economics and Management.
2021 Fiscal weakness, the (under-)provision of public services, and institutional reform. (with Manuel Oechslin) Conflict Management and Peace Science, 38(1), 20-44.
2018 Resource management under the risk of expropriation. Resource and Energy Economics, 52, 1-17.
2014 The Balassa-Samuelson Hypothesis and Elderly Migration. Ensayos Sobre Política Económica, 32(74), 1-8.
2013 Tropical Economic Miracles. Desarrollo & Sociedad, 72, 11-69.
2012 Determinants of civil conflict in Colombia: How robust are they? Defense and Peace Economics, 23(2), 109-131.
(with N. Daza)
2021 Fiscal weakness, the (under-)provision of public services, and institutional reform. (with Manuel Oechslin) Conflict Management and Peace Science, 38(1), 20-44.
2018 Resource management under the risk of expropriation. Resource and Energy Economics, 52, 1-17.
2014 The Balassa-Samuelson Hypothesis and Elderly Migration. Ensayos Sobre Política Económica, 32(74), 1-8.
2013 Tropical Economic Miracles. Desarrollo & Sociedad, 72, 11-69.
2012 Determinants of civil conflict in Colombia: How robust are they? Defense and Peace Economics, 23(2), 109-131.
(with N. Daza)