Oil prices have fluctuated remarkably in recent years. Previous studies have analysed the impacts of future oil prices on the energy system and greenhouse gas emissions, but none have quantitatively assessed how the broader, energy-system-wide impacts of diverging oil price futures depend on a suite of critical uncertainties. Here we use the MESSAGE integrated assessment model to study several factors potentially influencing this interaction, thereby shedding light on which future unknowns hold the most importance. We find that sustained low or high oil prices could have a major impact on the global energy system over the next several decades; and depending on how the fuel substitution dynamics play out, the carbon dioxide consequences could be significant (for example, between 5 and 20% of the budget for staying below the internationally agreed 2 ∘C target). Whether or not oil and gas prices decouple going forward is found to be the biggest uncertainty.
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The authors acknowledge funding provided by the ADVANCE project (FP7/2007–2013, grant agreement No. 308329) of the European Commission. The International Energy Agency (in particular A. Bromhead, L. Cozzi, N. Selmet and G. Zazias) provided critical data support, which made the price calibration possible in the model. P. Kolp and M. Strubegger of IIASA are also recognized for their assistance with model code development.
The authors declare no competing financial interests.
Supplementary Tables 1–7, Supplementary Figures 1–7, Supplementary Discussion, Supplementary Methods and Supplementary References. (PDF 1250 kb)
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McCollum, D., Jewell, J., Krey, V. et al. Quantifying uncertainties influencing the long-term impacts of oil prices on energy markets and carbon emissions. Nat Energy 1, 16077 (2016). https://doi.org/10.1038/nenergy.2016.77
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