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

Daniel Nachtigall () and Dirk Ruebbelke ()
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Dirk Ruebbelke: Technische Universitaet Bergakademie Freiberg, Lehrstuhl fuer Allgemeine Volkswirtschaftslehre, insbesondere Rohstoffokonomik
Authors registered in the RePEc Author Service: Dirk T.G. Rübbelke

No 2014002, BDPEMS Working Papers from Berlin School of Economics

Abstract: The green paradox conveys the idea that climate policies may have unintended side effects when taking into account the reaction of fossil fuel suppliers. In particular, carbon taxes that will be implemented in the future induce resource owners to extract more rapidly which increases present carbon dioxide emissions and accelerates global warming. Our results suggest that future carbon taxes may even decrease present emissions if resource owners face increasing marginal extraction costs and if there is a clean energy source that is a perfect substitute and exhibits learning-by-doing (LBD). If the marginal extraction cost curve is sufficiently flat, resource owners respond to a future carbon tax with lowering total extraction and only slightly increase present extraction. Moreover, taxation leads to higher energy prices which induces the renewable energy firms to increase output not only in the future, but also in the present because of the anticipated benefits from LBD. This crowds out energy from the combustion of fossil fuels and may outweigh the initial increase in present extraction, leading to less emissions in the present. Creation Date: 2014-04-15

Keywords: climate change; exhaustible resources; learning-by-doing; green paradox (search for similar items in EconPapers)
JEL-codes: H23 Q28 Q38 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-env
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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 (2013)
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