The amount of fossil fuels extracted in a year is equal to the amount of fossil fuels burned in a year (give or take reserves, which will even out in the long run). So if fossil fuel extraction were reduced, CO2 emissions would be reduced, regardless of any taxes, cap-and-trade, alternative energy sources, etc that may or may not be in effect. Indeed, the only way that traditional environmental measures such as the above can reduce carbon emissions is if their effect on fossil fuel prices eventually causes less extraction.
Therefore it seems logical that the best way to reduce CO2 emissions is to pay fossil fuel extractors to reduce their extraction rate. This should not cost the extractors too much because they will still own the resources and will be able to monetise them eventually. But environmentalists do not favour such subsidies to e.g. Saudi Arabia and when I have brought up this suggestion to environmentalists they have looked at me funny and suggested the issue was complicated, but never provided any direct reason why this should be a bad idea. This makes me think I am missing something obvious, that this is a silly idea.
Is there academic literature on this or similar concepts? Why isn’t this a good idea for reducing CO2 emissions?
If you pay Saudia Arabia to produce less, then someone else will produce more unless you pay them not to, too. And any of them could secretly overproduce the lower quota.
AND once you’ve lowered the supply, then the price will rise, making the number of potentially profitable oil-producing states rise, increasing the number of people you need to pay off, and increasing the amount you need to pay each one.
The amount of fossil fuels extracted in a year is equal to the amount of fossil fuels burned in a year (give or take reserves, which will even out in the long run).
Fossil fuels are used for purposes other than burning. They are used in making plastic, in making fertilizer and in synthesizing chemicals as well.
Deferment (producing later instead of now) is really expensive if you are using a reasonable discount rate, so this would be quite expensive. I think your plan would also constrain supply, raising the oil/gas price and making the cost even higher.
If you want to ballpark costs, try deferring whatever fraction you like of us oil prod for, say, 10 years. Try a discount rate of 7-8% and figure out the costs/year. I would assume oil price of at least 80/bbl if you are trying to estimate costs on a reasonable timescale.
If nothing else, because it would be prohibitively expensive. Globally, something like 70 million barrels of oil are produced per day. The total value of all barrels produced in a year varies depending on the price of oil, but at a highish but realistic $100bbl, you’re talking about two and a half trillion US dollars per year. If you were to reduce the supply by introducing a ‘buyer’ (read: subsidy to defer production) for some large percentage of those barrels, then the price would go even higher; this project would probably cost more than the entire global military budget combined, with no immediate practical or economic benefits.
It sounds like a thought-terminating cliche. Sort of like saying that we should solve all our problems on Earth before we start exploring space. If Saudi Arabia’s marginal oil is less cost-effective than fracking, then it’s better for them to stop extracting as much and us to extract more. Are you trying to say that we should stop our own production first regardless, or that fracking has the lowest cost-effectiveness and we should worry about fracking before drilling?
Changing oil extraction rates is a complex political issue where price isn’t the only variable that matters. Neither of the statements you made matches the one I made above.
It costs a lot of money and only defers the problem. Extracting less coal and less oil doesn’t do much to address increasing energy demands. You’ll get some decrease when the price goes up from restricting supply, but once thing stabilize it’s going to continue rising.
Basically, you’re temporarily reducing emissions without addressing the circumstances that brought about high emissions in the first place.
The amount of fossil fuels extracted in a year is equal to the amount of fossil fuels burned in a year (give or take reserves, which will even out in the long run). So if fossil fuel extraction were reduced, CO2 emissions would be reduced, regardless of any taxes, cap-and-trade, alternative energy sources, etc that may or may not be in effect. Indeed, the only way that traditional environmental measures such as the above can reduce carbon emissions is if their effect on fossil fuel prices eventually causes less extraction.
Therefore it seems logical that the best way to reduce CO2 emissions is to pay fossil fuel extractors to reduce their extraction rate. This should not cost the extractors too much because they will still own the resources and will be able to monetise them eventually. But environmentalists do not favour such subsidies to e.g. Saudi Arabia and when I have brought up this suggestion to environmentalists they have looked at me funny and suggested the issue was complicated, but never provided any direct reason why this should be a bad idea. This makes me think I am missing something obvious, that this is a silly idea.
Is there academic literature on this or similar concepts? Why isn’t this a good idea for reducing CO2 emissions?
If you pay Saudia Arabia to produce less, then someone else will produce more unless you pay them not to, too. And any of them could secretly overproduce the lower quota.
AND once you’ve lowered the supply, then the price will rise, making the number of potentially profitable oil-producing states rise, increasing the number of people you need to pay off, and increasing the amount you need to pay each one.
Fossil fuels are used for purposes other than burning. They are used in making plastic, in making fertilizer and in synthesizing chemicals as well.
Deferment (producing later instead of now) is really expensive if you are using a reasonable discount rate, so this would be quite expensive. I think your plan would also constrain supply, raising the oil/gas price and making the cost even higher.
If you want to ballpark costs, try deferring whatever fraction you like of us oil prod for, say, 10 years. Try a discount rate of 7-8% and figure out the costs/year. I would assume oil price of at least 80/bbl if you are trying to estimate costs on a reasonable timescale.
If nothing else, because it would be prohibitively expensive. Globally, something like 70 million barrels of oil are produced per day. The total value of all barrels produced in a year varies depending on the price of oil, but at a highish but realistic $100bbl, you’re talking about two and a half trillion US dollars per year. If you were to reduce the supply by introducing a ‘buyer’ (read: subsidy to defer production) for some large percentage of those barrels, then the price would go even higher; this project would probably cost more than the entire global military budget combined, with no immediate practical or economic benefits.
The main thing you want to do when you want to reduce fossil fuel extraction is to outlaw fracking and make it harder by vetoing pipeline bills.
Paying Saudi Arabia to lower extration rates while at the same time increasing fracking production makes no sense.
Are you saying that’s true in general, or that it just so happens that Saudi Arabia drilling is more cost-effective than fracking?
I don’t know what “true in general” means here.
It sounds like a thought-terminating cliche. Sort of like saying that we should solve all our problems on Earth before we start exploring space. If Saudi Arabia’s marginal oil is less cost-effective than fracking, then it’s better for them to stop extracting as much and us to extract more. Are you trying to say that we should stop our own production first regardless, or that fracking has the lowest cost-effectiveness and we should worry about fracking before drilling?
Changing oil extraction rates is a complex political issue where price isn’t the only variable that matters. Neither of the statements you made matches the one I made above.
It costs a lot of money and only defers the problem. Extracting less coal and less oil doesn’t do much to address increasing energy demands. You’ll get some decrease when the price goes up from restricting supply, but once thing stabilize it’s going to continue rising.
Basically, you’re temporarily reducing emissions without addressing the circumstances that brought about high emissions in the first place.