Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26537
Authors: 
Hoel, Michael
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2492
Abstract: 
Fossil fuels are non-renewable carbon resources, and the extraction path of these resources depends both on present and future demand. When this Hotelling feature is taken into consideration, the whole price path of carbon fuel will shift downwards as a response to the reduced cost of the renewable substitute. An implication of this is that greenhouse gas emissions in the near future may increase as a response to the reduced cost of the renewable substitute. If this is the case, increased climate costs may outweigh the benefits of reduced costs of a substitute, thus reducing overall social welfare.
Subjects: 
Climate change
exhaustible resources
renewable energy
JEL: 
Q30
Q42
Q54
Document Type: 
Working Paper

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