Simultaneous Supplies of Dirty and Green Fuels with Capacity Constraint: Is there a Green Paradox?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4360

Classification and Topics

• Classification: Wirtschaft ; Nonrenewable Resources and Conservation: Government Policy ; Climate; Natural Disasters and Their Management; Global Warming ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
• Subject: capacity constraints ; green paradox ; climate change

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gronwald, Marc ; Long, Ngo Van ; Röpke, Luise
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/80509
• Last update: 10.03.2025, 11:45 AM CET