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Coal Subsidies and Global Carbon Emissions

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  • Miles K. Light

Abstract

It has been suggested that eliminating coal production subsidies could substantially reduce global carbon emissions. This paper finds otherwise. Using a dynamic model of the international coal market, the paper investigates the consequences of subsidy elimination in a model incorporating sector specific capital constraints. In the short-run, following elimination of subsidies, producers with excess capacity divert domestic production into the export market, softening price increases. Over time, low cost exporters gain market share from the swing supplier, which further attenuates the market response to subsidy elimination. Given this market structure, production subsidy elimination in Europe and Japan may reduce world steam coal demand by as little as 0.5%, and global CO2 emissions by only 0.2

Suggested Citation

  • Miles K. Light, 1999. "Coal Subsidies and Global Carbon Emissions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 117-148.
    • Handle: RePEc:aen:journl:1999v20-04-a05
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    Citations

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    Cited by:

    1. Julien Xavier Daubanes & Fanny Henriet & Katheline Schubert, 2017. "More Gas, Less Coal, and Less CO2? Unilateral CO2 Reduction Policy with More than One Carbon Energy Source," IFRO Working Paper 2017/09, University of Copenhagen, Department of Food and Resource Economics.
    2. Julien Xavier Daubanes & Fanny Henriet & Katheline Schubert, 2021. "Unilateral CO2 Reduction Policy with More Than One Carbon Energy Source," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(3), pages 543-575.
    3. Lu, Juan & Li, He, 2022. "Can high-speed rail improve enterprise capacity utilization? A perspective of supply side and demand side," Transport Policy, Elsevier, vol. 115(C), pages 152-163.
    4. Liu, Wei & Li, Hong, 2011. "Improving energy consumption structure: A comprehensive assessment of fossil energy subsidies reform in China," Energy Policy, Elsevier, vol. 39(7), pages 4134-4143, July.
    5. Li, Yingzhu & Shi, Xunpeng & Su, Bin, 2017. "Economic, social and environmental impacts of fuel subsidies: A revisit of Malaysia," Energy Policy, Elsevier, vol. 110(C), pages 51-61.
    6. Stephen Schmidt, 2001. "Incentive Effects of Expanding Federal Mass Transit Formula Grants," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(2), pages 239-261.
    7. Yi, Ming & Liu, Yafen & Sheng, Mingyue Selena & Wen, Le, 2022. "Effects of digital economy on carbon emission reduction: New evidence from China," Energy Policy, Elsevier, vol. 171(C).
    8. Riker, David A., 2012. "International coal trade and restrictions on coal consumption," Energy Economics, Elsevier, vol. 34(4), pages 1244-1249.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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