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Abandoning Fossil Fuel; How fast and how much?

Armon Rezai and (Rick) van der Ploeg, Frederick ()

No 123, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

Abstract: Climate change must deal with two market failures, global warming and learning by doing in renewable use. The social optimum requires an aggressive renewables subsidy in the near term and a gradually rising carbon tax which falls in long run. As a result, more renewables are used relative to fossil fuel, there is an intermediate phase of simultaneous use, the carbonfree era is brought forward, more fossil fuel is locked up and global warming is lower. The optimal carbon tax is not a fixed proportion of world GDP. The climate externality is more severe than the learning by doing one.

Keywords: climate change; integrated assessment; Ramsey growth; carbon tax; renewables subsidy; learning by doing; directed technical change; multiplicative damages; additive damages (search for similar items in EconPapers)
JEL-codes: H21 Q51 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
Date: 2014
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Related works:
Working Paper: Abandoning Fossil Fuel: How Fast And How Much? (2014) Downloads
Working Paper: Abandoning Fossil Fuel: How fast and how much? (2013) Downloads
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