Climate policy and the optimal extraction of high- and low-carbon fossil fuels

Sjak Smulders () and Edwin van der Werf ()

Canadian Journal of Economics, 2008, vol. 41, issue 4, pages 1421-1444

Abstract: flow-constraint may substitute towards the relatively dirty input. As the economy tries to maximize output per unit of emissions it is not only carbon content that matters: productivity matters as well. With an announced constraint the economy first substitutes towards the less productive input such that more of the productive input is available when constrained. Preliminary empirical results suggest that it is cost-effective to substitute away from dirty coal to cleaner oil or gas, but to substitute from natural gas towards the dirtier input oil.

JEL-codes: O13 Q31 Q43 (search for similar items in EconPapers)
Date: 2008

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Related works:
Working Paper: Climate Policy and the Optimal Extraction of High- and Low-Carbon Fossil Fuels (2007)
Working Paper: Climate policy and the optimal extraction of high- and low-carbon fossil fuels (2005)
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