EMF WP 12.1: Energy Security Impacts of Carbon Emission Reduction

Recent concern over the effects of rising concentrations of CO2 in the world’s atmosphere on the global climate and the environment has led to calls for policies that will stabilize and reduce CO2 emissions relative to 1990 levels. Any significant cut in CO2 emissions, such as those modeled in the Energy Modeling Forum 12 (EMF 12) study, will change the amount and mix of fuels consumed by the United States. This paper examines whether these changes adversely affect U.S. Energy Security.

Policies aimed at reducing CO2 emissions will cause demand-side and supply-side adjustments in energy markets. On the demand side, these polices will encourage three types of conservation: the substitution of capital for energy (e.g. adding insulation to a building); changes in the industrial product mix of the economy (e.g. moving away from energy-intensive industries); and doing with less (e.g. turning down the thermostat). On the supply side, CO2 reduction policies such as carbon tax will encourage a transition away from the carbon-intensive fuels such as coal towards non-carbon intensive fuels such as renewable fuels or natural gas. The analyses of the EMF 12 model results conducted for this paper consider these types of adjustments.

This paper is divided into two major sections. The first section defines energy security and offers a list of energy security indicator variables. Policy makers can monitor changes in these variables to see if the Nation’s energy security is enhanced or diminished by different actions. The second section analyzes the results from different EMF 12 models during the time period 1990 to 2030 on the basis of many of these indicators.

Our analyses of the EMF 12 data do not reveal any significant adverse impacts on energy security associated with reducing CO2 emissions. This conclusion must be tempered as several key energy security variables could not be addressed given the available data. In particular, this paper does not consider the effect of reducing CO 2 on the change in GDP due to oil price shocks. A more comprehensive look at energy security might uncover energy security impacts that were missed.