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Without an international climate agreement, extraction of more natural gas could reduce emissions of CO 2 as more “clean” natural gas may drive out “dirty” coal and oil. Using a computable equilibrium model for the Western European electricity and natural gas markets, we examine whether increased extraction of natural gas in Norway reduces global emissions of CO 2. We find that both in the short run and in the long run total emissions are reduced if the additional quantity of natural gas is used in gas power production in Norway. If instead the additional quantity is exported directly, total emissions increase both in the short run and in the long run. However, if modest CO 2-taxes are imposed, increased extraction of natural gas will reduce CO 2 emissions also when the additional natural gas is exported directed. Copyright Kluwer Academic Publishers 2004carbon emissions, electricity, energy markets, equilibrium modelling, natural gas,

Does Increased Extraction of Natural Gas Reduce Carbon Emissions?