Climate policies as a hedge against the uncertainty on future oil supply

Julie Rozenberg (1) , Stéphane Hallegatte (1, 2) , Adrien Vogt-Schilb (1) , Olivier Sassi (1) , Céline Guivarch (1) , Henri Waisman (1) , Jean Charles Hourcade (1)

1 CIRED - centre international de recherche sur l'environnement et le développement
2 CNRM - Centre national de recherches météorologiques

Despite the inextricable link between oil scarcity and climate change, the interplay between these two issues is paradoxically an underworked area. This article uses a global energy-economy model to address the link between future oil supply and climate change and assesses in a common framework both the costs of climate policies and oil scarcity. It shows that, in the context of a limited and uncertain amount of ultimately recoverable oil resources, climate policies reduce the world vulnerability to peak oil. Climate policies, therefore, appear as a hedging strategy against the uncertainty on oil resources, in addition to their main aim of avoiding dangerous climate change. This co-benefit is estimated at the net present value of US$11,500 billion. Eventually, reducing the risk of future economic losses due to oil scarcity may appear as a significant side-benefit of climate policies to many decision-makers.

Keywords: uncertainty; Climate policies; peak oil; hedge; cost; uncertainty.

Domains: Economics and Finance; Environmental Sciences; Ecology, environment

Julie Rozenberg, Stéphane Hallegatte, Adrien Vogt-Schilb, Olivier Sassi, Céline Guivarch, et al.. Climate policies as a hedge against the uncertainty on future oil supply. Climatic Change, 2010, 101 (3-4), pp.663-668. ⟨10.1007/s10584-010-9868-8⟩. ⟨hal-00667118⟩