The Green Paradox and Learning-by-doing in the Renewable Energy Sector

Daniel Nachtigall () and Dirk Rübbelke

No 2013-09, Working Papers from BC3

Abstract: We investigate the effect of climate policies on fossil fuel use in the presence of a clean alternative technology that exhibits learning-by-doing. In a two-period framework, the costs of clean and regenerative energy in the second period are decreasing with the amount of this energy produced in the first one. While a carbon tax on present fossil fuels always reduces the use of the conventional energy source, the effect of a subsidy for regenerative energy is ambiguous and depends on the size of the learning effect. For small learning effects, a subsidy reduces the present use of fossil fuels since their substitute becomes comparatively cheap. However, for larger learning effects, a subsidy leads to the green paradox as the cost reduction in the clean energy sector reduces the future demand for conventional energy and brings forward extraction. We conclude that the best way to reduce present CO2 emissions is the implementation of a carbon tax. If the learning effect is small, the carbon-tax revenues should additionally finance the subsidy for the renewable energy.

Keywords: climate change; exhaustible resources; regenerative energy; green paradox (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The green paradox and learning-by-doing in the renewable energy sector (2016)
Working Paper: The Green Paradox and Learning-by-Doing in the Renewable Energy Sector (2014)
Working Paper: The green Paradox and Learning-by-Doing in the renewable energy sector (2014)
Working Paper: The Green Paradox and Learning-by-Doing in the Renewable Energy Sector
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