Brown backstops versus the green paradox

Thomas O. Michielsen

Journal of Environmental Economics and Management, 2014, vol. 68, issue 1, 87-110

Abstract: Anticipated climate policies are ineffective when fossil fuel owners respond by shifting supply intertemporally (the green paradox). This mechanism relies crucially on the exhaustibility of fossil fuels. We analyze the effect of anticipated climate policies on emissions in a simple model with two fossil fuels: one scarce and dirty (e.g. oil), the other abundant and dirtier (e.g. coal). We derive conditions for a ‘green orthodox’: anticipated climate policies may reduce current emissions. The model can also be used to analyze spatial carbon leakage. Calibrations suggest that intertemporal carbon leakage (from 0% to 8%) is a relatively minor concern.

Keywords: Carbon tax; Green paradox; Exhaustible resource; Backstop; Climate change (search for similar items in EconPapers)
JEL-codes: Q31 Q54 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:68:y:2014:i:1:p:87-110

DOI: 10.1016/j.jeem.2014.04.004

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