Preserving Eastern or Offshore Oil for Preventing Green Paradoxes?

Mark Schopf

No 63, Working Papers CIE from Paderborn University, CIE Center for International Economics

Abstract: This paper deals with possible foreign reactions to unilateral carbon supply reducing policies. It differentiates between demand side and supply side reactions as well as between intra- and intertemporal shifts of greenhouse gas emissions. Ritter & Schopf (2013) integrate stock-dependent marginal physical costs of extracting fossil fuels into Eichner & Pethig’s (2011) general equilibrium carbon leakage model. Using this model, we change the policy instrument from an emissions trading scheme to a deposit preserving system. Thereby, we distinguish between purchasing high-value and low-value reserves. The results are as follows: In case of eastern oil kept underground, the weak and the strong green paradox arise under similar conditions to those derived by Ritter & Schopf (2013). In case of offshore oil kept underground, there is intra- and there can be intertemporal carbon leakage, but neither the present emissions nor the cumulative climate damages increase.

Keywords: Natural Resources; Carbon Leakage; Green Paradox (search for similar items in EconPapers)
JEL-codes: Q31 Q32 Q54 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-06
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:pdn:ciepap:63

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