Substituting the Future for the Past: A Decomposition Analysis Using MarketSim

The research argues that government models for offshore oil and gas leasing often underestimate climate impacts by assuming continued fossil fuel reliance and ignoring climate initiatives. Using the Bureau of Ocean Energy Management’s Market Simulation Model, the authors demonstrate that accounting for increased substitution between fossil fuels and renewables leads to more elastic energy demand and significantly higher projected net climate effects from leasing policies.

• Government models frequently underestimate the climate impacts of offshore leasing policies because they assume a continued reliance on fossil fuels and fail to account for ongoing climate initiatives.
• Theoretical analysis suggests that future climate action may increase the substitution between renewables and fossil fuels, which would result in more elastic energy demand.
• Integrating potential shifts in energy production and consumption into policy baselines leads to a significant increase in the projected net climate effects associated with offshore leasing.

APA

Howard, M. X. P. (2025). Substituting the Future for the Past: A Decomposition Analysis Using MarketSim. Institute for Policy Integrity. https://policyintegrity.org/publications/detail/substituting-the-future-for-the-past-a-decomposition-analysis-using-marketsim

Chicago

Howard, Minhong Xu, Peter. Substituting the Future for the Past: A Decomposition Analysis Using MarketSim. Institute for Policy Integrity, 2025. https://policyintegrity.org/publications/detail/substituting-the-future-for-the-past-a-decomposition-analysis-using-marketsim.

Wikipedia

{{cite report |last1=Howard |first1=Minhong Xu, Peter |title=Substituting the Future for the Past: A Decomposition Analysis Using MarketSim |publisher=Institute for Policy Integrity |date=15 October 2025 |url=https://policyintegrity.org/publications/detail/substituting-the-future-for-the-past-a-decomposition-analysis-using-marketsim |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{howard2025substituting, author = {Howard, Minhong Xu, Peter}, title = {{Substituting the Future for the Past: A Decomposition Analysis Using MarketSim}}, institution = {Institute for Policy Integrity}, year = {2025}, month = oct, url = {https://policyintegrity.org/publications/detail/substituting-the-future-for-the-past-a-decomposition-analysis-using-marketsim}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }