Under which conditions unilateral tightening of climate policy causes a weak or strong green paradox or even decreases social welfare has recently been studied by Hoel (2011). Hoel assumes that the costs of extracting fossil fuel are linear in output. We extend his model by allowing for progressively increasing and stock dependent extraction costs…
The focus of the green paradox literature has been either on demand-side climate policies or on effects of technological changes. The present paper addresses the question of whether there also might be some kind of green paradox related to supply-side policies, i.e. policies that permanently remove some of the carbon resources.
The Green Paradox states that a gradually more ambitious climate policy such as a renewables subsidy or an anticipated carbon tax induces fossil fuel owners to extract more rapidly and accelerate global warming. However, if extraction becomes more costly as reserves are depleted, such policies also shorten the fossil fuel era, induce more fossil fuel to be left in the earth and thus curb cumulative carbon emissions…
We show how a monopolistic owner of oil reserves responds to a carbon-free substitute becoming available at some uncertain point in the future if demand is isoelaastic and variable extraction costs are zero but upfron exploration investment costs have to be made…
This article reviews a selection of contributions to the Green Paradox literature and discusses the relevance of the theory for real world climate policies
This FEEM working paper highlights that the emergence of the Green Paradox within this framework relies on the non-existence of a backstop technology and fixed fossil fuel resources
… Second-Best Policy or Fatal Aberration for Mitigation? A FEEM working paper
Can a Green Paradox Arise without Scarcity?, by S. Smulders, Y. Tsur and A. Zemel, CESifo Working Paper
New Economics Papers Energy Economics (REPEC)
