Fossil fuel lock-in: the carbon pricing key

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 19 March 2019


#132 Crawford Building, Seminar Room 1, 1 Lennox Crossing, ANU


Associate Professor Paul Burke, Crawford School of Public Policy, ANU


Ross McLeod, Seminar Convener

Long-term lock-in is a defining characteristic of energy systems, for reasons including the long-lived nature of energy infrastructure and the role of local endowments. As a result, energy systems develop a path dependence under which current energy-type use is strongly influenced by past use. The analysis uses data for nine energy types and a large sample of countries, finding varying degrees of energy-type lock-in over time. The study also finds empirical evidence that carbon pricing plays a key role in tilting energy mixes in a low-carbon direction. As a result, the average annual growth rate of carbon dioxide emissions per capita from fossil fuel combustion has been significantly lower for countries that have had a carbon price compared to countries without, even after controlling for the use of other policies aimed at reducing emissions. The findings bear policy implications for countries wishing to transition their energy systems and reduce their carbon dioxide emissions.

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