Reverse Auctioning (LINGO Incentives)

A reverse auction for fossil fuel conservation would involve a regulatory body inviting right-holders to bid for compensation in exchange for agreeing not to extract specific fossil fuel reserves. Participants would submit bids reflecting the minimum payment they require to forgo their extraction rights, with the lowest bid winning the contract. This competitive process ensures cost efficiency by minimizing compensation expenses while incentivizing the preservation of reserves deemed less economically valuable.

Additionally, the framework could be adapted to incorporate socio-environmental values, prioritizing reserves that overlap with biodiversity hotspots or other significant ecological areas, thereby generating collateral benefits alongside climate change mitigation efforts.

Resources :

•  Lorenzo Pellegrini, Murat Arsel, Martí Orta-Martínez, Carlos F. Mena, Gorka Muñoa (2020), Institutional mechanisms to keep unburnable fossil fuel reserves in the soil, Policy Perspective, November 2020