Bush Meets Hotelling: Effects of Improved Renewable Energy Technology on Greenhouse Gas Emissions
AbstractFossil 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 bene…ts of reduced costs of a substitute, thus reducing overall social welfare.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 29/2008.
Length: 30 pages
Date of creation: 02 Dec 2008
Date of revision:
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Climate change; exhaustible resources; renewable energy;
Find related papers by JEL classification:
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-14 (All new papers)
- NEP-ENE-2009-02-14 (Energy Economics)
- NEP-ENV-2009-02-14 (Environmental Economics)
- NEP-RES-2009-02-14 (Resource Economics)
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