What About Coal? Interactions between Climate Policies and the Global Steam Coal Market Until 2030

24 Pages Posted: 19 Aug 2011

See all articles by Clemens Haftendorn

Clemens Haftendorn

German Institute for Economic Research (DIW Berlin)

Claudia Kemfert

DIW Deutsches Institut für Wirtschaftsforschung

Franziska Holz

German Institute for Economic Research (DIW Berlin)

Date Written: August 1, 2011

Abstract

Because of economic growth and a strong increase in global energy demand the demand for fossil fuels and therefore also greenhouse gas emissions are increasing, although climate policy should lead to the opposite effect. The coal market is of special relevance as coal is available in many countries and often their first choice to meet energy demand. In this paper we assess possible interactions between climate policies and the global steam coal market. Possible market adjustments between demand centers through market effects are investigated with a numerical model of the global steam coal market until 2030: the "COALMOD-World" model. The COALMOD-World model is an equilibrium model that computes future trade flows, infrastructure investments and prices until 2030. We investigate three specific designs of climate policy: a unilateral European climate policy, an Indonesian export-limiting policy and a carbon capture and storage (CCS) fast-roll out policy in the broader context of climate policy and market constraints. We find that market adjustment effects in the coal market can have significant positive and negative impacts on the effectiveness of climate policies.

Keywords: climate policy, future coal production, energy, numerical modeling, international trade

Suggested Citation

Haftendorn, Clemens and Kemfert, Claudia and Holz, Franziska, What About Coal? Interactions between Climate Policies and the Global Steam Coal Market Until 2030 (August 1, 2011). DIW Berlin Discussion Paper No. 1146, Available at SSRN: https://ssrn.com/abstract=1911846 or http://dx.doi.org/10.2139/ssrn.1911846

Clemens Haftendorn (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Claudia Kemfert

DIW Deutsches Institut für Wirtschaftsforschung ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Franziska Holz

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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