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Open Access Publications from the University of California

Dynamics of the Oil Transition: Modeling Capacity, Costs, and Emissions


The global petroleum system is undergoing an “oil transition,” shifting from conventionally produced petroleum to a suite of substitutes for conventional petroleum (SCPs). This paper describes the Regional Optimization Model for Emissions from Oil Substitutes, or ROMEO, which models this oil transition. ROMEO models the dynamics of the transition to substitutes for oil and the environmental impacts (greenhouse gas (GHG) intensity) of such a transition. It models the global liquid fuel market in an optimization framework. The ROMEO market mechanism operates differently than “perfect foresight” models: it solves each year sequentially, with each year optimized under uncertainty about future prevailing prices or resource quantities.

ROMEO includes more fuel types than models designed for integrated assessments of climate change. ROMEO also includes the differing carbon intensities and costs of production of these fuel types. We use ROMEO to calculate the uncertainty of future costs, emissions, and total fuel production under a number scenarios. We first explore the effects of altering three key input parameters. We then use this flexibility to more formally explore two uncertainties simultaneously: the endowment of conventional petroleum, and future carbon taxes. Results indicate that emissions penalties from production of oil substitutes are on the order of 5-20 GtC over the next 50 years, and that these results are highly sensitive to the endowment of conventional oil and less sensitive to the values of a carbon tax.

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