Energy Economics: climate policies to avoid the rush-to-burn
Institutskolloquium
- Datum: 23.05.2025
- Uhrzeit: 10:30 - 12:00
- Vortragender: Prof. Kai Konrad
- Kai A. Konrad completed his doctoral studies in economics in 1990 and habilitated in 1993 at the Ludwig-Maximilian-Universität in Munich. From 1994 to 2009, he was a university professor in the Department of Economics at the Freie Universität Berlin, and from 2001 to 2009, he was also the director of the Department of Market Processes and Governance at the Social Science Research Center Berlin (WZB). Since 2009, he has been a scientific member of the Max Planck Society, since 2011 he is serving as Director at the Max Planck Institute for Tax Law and Public Finance. Since 1999, Konrad has been a member of the Scientific Advisory Board of the Federal Ministry of Finance, serving as its chair from 2011 to 2014. He is a member of the German National Academy of Sciences Leopoldina, the German Academy of Engineering Sciences (acatech), the Berlin-Brandenburg Academy of Sciences, the European Academy of Sciences and Arts, and the Academia Europaea. He holds an honorary doctorate from the Faculty of Economics at the University of Basel in 2023, primarily for his ‘fundamental theoretical contributions to the economic analysis of strategies in tournaments with applications in industrial economics as well as in political economy’.
- Ort: IPP Garching
- Raum: Arnulf-Schlüter Lecture Hall in Building D2 and Zoom
- Gastgeber: IPP
- Kontakt: stefan.possanner@ipp.mpg.de
A central issue that is discussed in climate policy is the fear of
owners of stocks of fossil hydrocarbon deposits that high CO2 taxes and
bans on the combustion use of hydrocarbons will turn their stocks into
stranded assets. They might react by extracting
and selling their reserves today: a rush to burn results. We show how
the stranded-asset problem could be avoided or strongly moderated. We
analyze a simple intertemporal equilibrium with a given stock of fossil
hydrocarbons. The key variable for a climate-neutral
solution to the rush-to-burn problem is to maintain existing and
generate new markets for climate-neutral products from fossil
hydrocarbons in the future.
We give examples of such products. In this framework subsidies for such
products (or for their innovation) also reduce the rush-to-burn problem.
In contrast, the creation of substitutes for fossil hydrocarbon-based
climate-neutral products, or subsidies for such products reduce the market for
products made from fossil hydrocarbons. This aggravates the
stranded-assets problem and thus has a climate-damaging effect.