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Cutting Costs of Catching Carbon - Intertemporal effects under imperfect climate policy

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Author Info

  • Hoel, Michael

    ()
    (Dept. of Economics, University of Oslo)

  • Jensen, Svenn

    ()
    (Ragnar Frisch Centre for Economic Research)

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    Abstract

    We use a two-period model to investigate intertemporal e ects of cost reductions in climate change mitigation technologies for the power sector. With imperfect climate policies, cost reductions related to carbon capture and storage (CCS) may be more desirable than comparable cost reductions related to renewable energy. The nding rests on the incentives fossil resource owners face. With regulations of emissions only in the future, cheaper renewables speed up extraction (the `green paradox'), whereas CCS cost reductions make fossil resources more attractive for future use and lead to postponement of extraction.

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2010/Memo-19-2010.pdf
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    Bibliographic Info

    Paper provided by Oslo University, Department of Economics in its series Memorandum with number 19/2010.

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    Length: 31 pages
    Date of creation: 03 Nov 2010
    Date of revision:
    Handle: RePEc:hhs:osloec:2010_019

    Contact details of provider:
    Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
    Phone: 22 85 51 27
    Fax: 22 85 50 35
    Email:
    Web page: http://www.oekonomi.uio.no/indexe.html
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    Related research

    Keywords: climate change; exhaustible resources; carbon capture and storage; renewable energy; green paradox;

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    References

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    1. Alain Ayong Le Kama & Mouez Fodha & LAFFORGUE Gilles, 2009. "Optimal Carbon Capture and Storage policies," LERNA Working Papers 09.24.300, LERNA, University of Toulouse.
    2. Rick van der Ploeg & Cees Withagen, 2010. "Is There Really a Green Paradox?," OxCarre Working Papers 035, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    3. Corrado Di Maria & Sjak Smulders & Edwin van der Werf, 2008. "Absolute Abundance and Relative Scarcity: Announced Policy, Resource Extraction, and Carbon Emissions," Working Papers 2008.92, Fondazione Eni Enrico Mattei.
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    Cited by:
    1. Dirk Rübbelke & Stefan Vögele, 2012. "Effects of Carbon Dioxide Capture and Storage in Germany on European Electricity Exchange and Welfare," Working Papers 2012-05, BC3.
    2. Grimaud, André & Rougé, Luc, 2012. "Carbon Sequestration, Economic Policies and Growth," IDEI Working Papers 751, Institut d'Économie Industrielle (IDEI), Toulouse, revised Aug 2013.

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