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Title:Cutting costs of catching carbon: Intertemporal effects under imperfect climate policy PDF Logo
Authors:Hoel, Michael
Jensen, Svenn
Issue Date:2010
Series/Report no.:CESifo working paper: Energy and Climate Economics 3284
Abstract:We use a two-period model to investigate intertemporal effects of cost reductions in climate change mitigation technologies for the power sector. With imperfect climate policies, cost reductions related to carbon capture and storage (CCS) may be more desirable than com-parable cost reductions related to renewable energy. The finding rests on the incentives fossil resource owners face. With regulations of emissions only in the future, cheaper renewables speed up extraction (the 'green paradox'), whereas CCS cost reductions make fossil resources more attractive for future use and lead to postponement of extraction.
Subjects:climate change
exhaustible resources
carbon capture and storage
renewable energy
green paradox
JEL:Q30
Q42
Q54
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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