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dc.contributor.authorvan der Ploeg, Fredericken_US
dc.contributor.authorWithagen, Cees A.en_US
dc.date.accessioned2010-03-09en_US
dc.date.accessioned2010-05-14T08:26:13Z-
dc.date.available2010-05-14T08:26:13Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/30701-
dc.description.abstractThe Green Paradox states that, in the absence of a tax on CO2 emissions, subsidizing a renewable backstop such as solar or wind energy brings forward the date at which fossil fuels become exhausted and consequently global warming is aggravated. We shed light on this issue by solving a model of depletion of non-renewable fossil fuels followed by a switch to a renewable backstop, paying attention to timing of the switch and the amount of fossil fuels remaining unexploited. We show that the Green Paradox occurs for relatively expensive but clean backstops (such as solar or wind), but does not occur if the backstop is sufficiently cheap relative to marginal global warming damages (e.g., nuclear energy) as then it is attractive to leave fossil fuels unexploited and thus limit CO2 emissions. We show that, without a CO2 tax, subsidizing the backstop might enhance welfare. If the backstop is relatively dirty and cheap (e.g., coal), there might be a period with simultaneous use of the non-renewable and renewable fuels. If the backstop is very dirty compared to oil or gas (e.g., tar sands), there is no simultaneous use. The optimum policy requires an initially rising CO2 tax followed by a gradually declining CO2 tax once the dirty backstop has been introduced. We also discuss the potential for limit pricing when the non-renewable resource is owned by a monopolist.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo working paper 2963en_US
dc.subject.jelQ30en_US
dc.subject.jelQ42en_US
dc.subject.jelQ54en_US
dc.subject.ddc330en_US
dc.subject.keywordGreen Paradoxen_US
dc.subject.keywordHotelling ruleen_US
dc.subject.keywordnon-renewable resourceen_US
dc.subject.keywordrenewable backstopen_US
dc.subject.keywordglobal warmingen_US
dc.subject.keywordcarbon taxen_US
dc.subject.keywordlimit pricingen_US
dc.subject.stwFörderung regenerativer Energienen_US
dc.subject.stwWirkungsanalyseen_US
dc.subject.stwFossiler Energieträgeren_US
dc.subject.stwHotelling-Regelen_US
dc.subject.stwKlimaveränderungen_US
dc.subject.stwÖkosteueren_US
dc.subject.stwSteuertarifen_US
dc.subject.stwKlimaschutzen_US
dc.subject.stwTheorieen_US
dc.titleIs there really a green paradox?en_US
dc.typeWorking Paperen_US
dc.identifier.ppn620642351en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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