The green Paradox and Learning-by-Doing in the renewable energy sector

Daniel Nachtigall () and Dirk Rübbelke

No 2014/31, Discussion Papers from Free University Berlin, School of Business & 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 at, 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.

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)
Date: 2014
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/103890/1/804994889.pdf (application/pdf)

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 (2013)
Working Paper: The Green Paradox and Learning-by-Doing in the Renewable Energy Sector
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:201431

Access Statistics for this paper

More papers in Discussion Papers from Free University Berlin, School of Business & Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().