Climate targets and fossil energy prices

Global fossil energ y consumption is increasing far too fast compared with what would be consistent with international climate targets. We can estimate that global fossil energ y consumption has: A long-term elasticity to global real GDP of around 0.5; A very low, or even zero, long-term elasticity to fossil energy prices (the short-term elasticity is -0.02). The fossil energ y prices have been markedly higher after 2003 than before, but this has therefore had only a very limited effect on demand for fossil energies. Regulations must therefore be used to reduce fossil energy consumption and CO 2 emissions, as the effect of fossil fuel prices is largely insufficient.