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Title:Absolute abundance and relative scarcity: Announced policy, resource extraction, and carbon emissions PDF Logo
Authors:Di Maria, Corrado
Smulders, Sjak
van der Werf, Edwin
Issue Date:2008
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 92.2008
Abstract:We study the effectiveness of climate change policy in a model with multiple non-renewable resources that differ in their carbon content. We find that, when allowing some time between announcement and implementation of a cap on carbon dioxide emissions, emissions from non-renewable energy sources increase at the time of announcement. There are two channels behind this effect. First, since a binding constraint on emissions restricts energy use during some period of time, more must be extracted during other periods. Second, since low carbon energy sources are relatively more valuable when the policy is implemented, it is optimal to conserve them ahead of enforcement. This might induce a switch to high-carbon resources before the policy is implemented.
Subjects:Climate Policy
Non-renewable Resources
Announcement Effects
Scarcity
Order of Extraction
JEL:Q31
Q41
Q54
Q58
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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