Abandoning fossil fuel : how fast and how much ?
Abandoning fossil fuel : how fast and how much ? / Armon Rezai and Frederick van der Ploeg. Oxford : Oxford Centre for the Analysis of Resource Rich Economies, September 2013, 40 p. (OxCarre Research Paper 123)
Authors’s 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 carbon- free 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.