Oil Price: Effect on Carbon Emission

The recent fall in oil price has significant effects on the economy and investment prospects in various countries. Most oil and gas producing companies have suspended drilling and producing plans. Although, this has dampened further investment in fossil fuel production, interests in alternative energies have severely been depressed. Following the fall in oil price, significant oil and gas consumption have been recorded in some countries. But the effects of oil and gas prices on carbon emission have not been addressed. Carbon emission policies and effects on climate change are ongoing global topical issue. A major challenge is cutting carbon emission while meeting the increasing demand for producing sustainable renewable energy for the ever growing population. Therefore, carbon emission could experience a rise as a result of increased oil and gas consumption. This paper will attempt to model the role of oil (and gas) price on carbon emission, and relates to the demand for sustainable energy in various economies.

The present status of carbon emission from fossil fuel and renewable sources of energy will be discussed. Oil and gas companies have been struggling to quantify the emission rate and price from their energy production processes. Also, there has not been any correlation between the oil price and carbon emission. This paper will present a model relating oil price and carbon emission. The emission pricing policies relation to these sources will be presented. Analysis of the effects of fall in oil and gas prices on carbon price will be presented, and related to the carbon pricing system.