Put an eye on the future: Rethinking the theoretical price of fossil energy based on the perspective of intergenerational equity

Abstract

Discovering the true value of fossil energy resources can make full use of the price regulation leverage to adjust the energy structure, relieve carbon emissions, and gain more time for renewable energy to replace fossil energy. As exhaustible resources, the exploitation and consumption of coal, oil, and natural gas can directly affect the environment and resources reserve of future generations, which will directly destroy the fairness of intergenerational transmission. To make the price of fossil resources work better, the theoretical energy prices composed of production costs (PC), user costs (UC), environmental costs (EC), and especially intergenerational compensation costs (IC) are taken into consideration in this study. In addition, the study probes the impact of the theoretical and actual prices of fossil energy resources on carbon intensity with the path analysis method and detects the key paths. Results show that the theoretical price of natural gas is compensated the most, followed by coal and oil. From the result of intergenerational equity, the theoretical prices of coal and oil have higher impacts on carbon intensity than their actual prices, while the condition of natural gas is not the same. It is necessary for decision-makers to fully consider the characteristics of environmental damage, scarcity, and especially intergenerational compensation when repricing coal and oil price. Fortunately, the actual price of natural gas is the most effective for realizing the intergenerational equality target. It is crucial to put an eye on the future in reexamining fossil energy prices and formulating relevant emission reduction policies.