Worst Possible Phaseout Strategy

One of the main themes I am exploring here is how to assure that phasing out fossil fuel is done in a way that increases fossil fuel company profits while solving global warming at the same time.

My idea is to voluntarily reduce production, watch prices go up, and compensate for the inevitable lower volume of sales with higher prices.

Unfortunately, Saudi Arabia (a large oil producer) seems to be moving in exactly the opposite direction.

Jim Krane writes at Foreign Affairs about their strategy. He says they may want to sell their oil before it becomes a “stranded asset” under climate regulation. They may want to speed up production for that reason. And other oil producers may start thinking like that as well, leading to a race between them with the goal of selling as much as they can while that is still possible.

The outcome of such thinking would be a lower oil price, more carbon in the atmosphere in the short term, and less of the valuable fossil fuel resource left for future generations.

I still think that global warming is easily solved once the fossil fuel owners understand how to profit from the phaseout.

Unfortunately, that particular condition seems to be rather hard to actually achieve.

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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