Brown Backstops Versus the Green Paradox

Thomas Michielsen

No 108, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

Abstract: Anticipated climate policies are ineffective when fossil fuel owners respond by shifting supply intertemporally (the green paradox). This mechanism relies crucially on the exhaustibility of fossil fuels. We analyze the effect of anticipated climate policies on emissions in a simple model with two fossil fuels: one scarce and dirty (e.g. oil), the other abundant and dirtier (e.g. coal). We derive conditions for a ’green orthodox’: anticipated climate policies may reduce current emissions. Calibrations suggest that intertemporal carbon leakage (from -22% to 13%) is a relatively minor concern.

Keywords: carbon tax; green paradox; exhaustible resource; backstop; climate change (search for similar items in EconPapers)
Date: 2013-03-29
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:108

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