Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80509
Authors: 
Gronwald, Marc
Long, Ngo Van
Röpke, Luise
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4360
Abstract: 
This paper contributes to the green paradox literature by using a resource extraction framework with heterogeneous energy sources. A key feature of the model is a capacity constrained green backstop resource, which implies the simultaneous use of the expensive backstop resource and the cheaper exhaustible resources, over some interval of time. Two dirty exhaustible resources are considered, reflecting cost structure and carbon content heterogeneities of energy sources. The policies under consideration are taxation of the dirty resources and the promotion of the green resource via subsidies or capacity-increasing measures. The key findings, compared to a baseline scenario without policy intervention, are that (1) expanding the capacity of the green sector can decrease social welfare, (2) both green energy promotion measures lead to increases in short-term emissions, and (3) none of the analyzed policy measures leads to a decrease in the aggregate duration of the extraction of the exhaustible resources.
Subjects: 
capacity constraints
green paradox
climate change
JEL: 
Q38
Q54
H23
Document Type: 
Working Paper

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