The Green Paradox and Greenhouse Gas Reducing Investments

Michael Hoel ()

International Review of Environmental and Resource Economics, 2011, vol. 5, issue 4, 353-379

Abstract: If governments cannot commit to future carbon tax rates, investments in greenhouse gas mitigation will be based on uncertain and/or wrong predictions about these tax rates. Predictions about future carbon tax rates are also important for decisions made by owners of nonrenewable carbon resources. The effects of the size of expected future carbon taxes on near-term emissions and investments in substitutes for carbon energy depend significantly on how rapidly extraction costs increase with increasing total extraction. In addition, the time profile of the returns to investments in noncarbon substitutes is important for the effects on emissions and investments.

Keywords: Climate change; Carbon tax; Green paradox; Commitment; Exhaustible resources (search for similar items in EconPapers)
JEL-codes: H23 Q30 Q42 Q54 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (16)

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