Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192729 
Year of Publication: 
2013
Series/Report no.: 
Discussion Papers No. 747
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
In absence of joint global action, many jurisdictions take unilateral steps to reduce carbon emissions, and the usual strategy is to restrict domestic demand for fossil fuels. The impact on global emissions of such demand side policies is found by accounting for carbon leakage, i.e. changes in emissions abroad induced by the domestic action. Another domestic option for fossil fuel producers, that is yet not well explored, is to reduce own supply of fossil fuels, again accounting for leakages. We explore analytically and numerically how domestic demand and supply side policies affect global emissions, contingent on market behaviour in the fossil fuel markets. Next, we combine this with costs of demand- and supply side policies to find the cost-effective combination of the two types of policies. Norway is the case in our numerical analysis. Our results indicate that given a desire for domestic action and a care for global emissions, the majority of emission reductions should come through supply side measures, i.e., by downscaling Norwegian oil extraction.
Subjects: 
Climate policies
Carbon leakages
Oil extraction
Supply side climate policies
Demand side climate policies
JEL: 
H23
Q41
Q54
Document Type: 
Working Paper

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