 Cumulative Carbon Emissions and the Green ParadoxFrederick (Rick) van der Ploeg No 110, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford Abstract: The Green Paradox states that a gradually more ambitious climate policy such as a renewables subsidy or an anticipated carbon tax induces fossil fuel owners to extract more rapidly and accelerate global warming. However, if extraction becomes more costly as reserves are depleted, such policies also shorten the fossil fuel era, induce more fossil fuel to be left in the earth and thus curb cumulative carbon emissions. This is relevant as global warming depends primarily on cumulative emissions. There is no Green Paradox for a specific carbon tax that rises at less than the market rate of interest. Since this is the case for the growth of the optimal carbon tax, the Green Paradox is a temporary second-best phenomenon. There is also a Green Paradox if there is a chance of a breakthrough in renewables technology occurring at some random future date. However, there will also be less investment in opening up fossil fuel deposits and thus cumulative carbon emission will be curbed. Keywords: global warming; Green Paradox; carbon tax; renewables subsidy; second best; technological breakthrough (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:110 Access Statistics for this paper More papers in OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to econpapers@oru.se.
EconPapers is hosted by the
School of Business at Örebro University.