Interactions between technological development, climate policy and energy markets - national and international perspectives

The project examine international issues, as well as national challenges, related to the interactions between technological development, climate policy and energy markets. The national perspective is addressed by using a computable general equilibrium (C GE) model approach with particular focus on the nexus between energy, emission and innovation policies. Our aim is to provide new knowledge about the role of small, open economies, like Norway, in taking up this challenge. The particularities of Norway in clude her role as a major gas and oil exporter and her potential for development of CO2 sequestration technologies. We will also address the prospects for use of hydrogen in the transport sector. By using a formal economic model of lock-in, as well as th e CGE model, we aim to analyse to what extent the current transportation system based on the internal combustion engine (ICE) and gasoline constitutes a typical technological lock-in, and whether the transition to a hydrogen/fuel cell-based transport syst em demands extensive government support. We also apply a global energy market perspective to technological development and climate change. We assess how international climate policies and public support of CO2-free energy may affect the development of CO 2-free energy, including gas power with CO2 removal. The implications for the European gas market are investigated and we do, in particular, examine effects on profitability of Norwegian gas. Finally, we assess how the profitability of Norwegian gas resou rces will be affected by a combination of international climate policies and reduced costs of the LNG technology.