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Climate Policies in a Fossil Fuel Producing Country - Demand Versus Supply Side Policies

Author

Listed:
  • Taran Fæhn
  • Cathrine Hagem
  • Lars Lindholt
  • Ståle Mæland
  • Knut Einar Rosendahl

Abstract

In absence of joint global climate action, several jurisdictions unilaterally restrict their domestic demand for fossil fuels. Another policy option for fossil fuel producing countries, not much explored, is to reduce own supply of fossil fuels. We explore analytically and numerically how domestic demand and supply side policies affect global emissions, contingent on market behaviour. Next, in the case of Norway, we find the cost-effective combination of the two types of policies. Our results indicate that given a care for global emissions, and a desire for domestic action, a majority of emission reductions should come through supply side measures.

Suggested Citation

  • Taran Fæhn & Cathrine Hagem & Lars Lindholt & Ståle Mæland & Knut Einar Rosendahl, 2014. "Climate Policies in a Fossil Fuel Producing Country - Demand Versus Supply Side Policies," CESifo Working Paper Series 5105, CESifo.
    • Handle: RePEc:ces:ceswps:_5105
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    More about this item

    Keywords

    climate policies; carbon leakages; oil extraction; supply side climate policies; demand side climate policies;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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