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US biofuels subsidies and CO2 emissions: An empirical test for a weak and a strong green paradox

Listed author(s):
  • Grafton, R. Quentin
  • Kompas, Tom
  • Long, Ngo Van
  • To, Hang

Using energy data over the period 1981–2011 we find that US biofuels subsidies and production have provided a perverse incentive for US fossil fuel producers to increase their rate of extraction that has generated a weak green paradox. Further, in the short-run if the reduction in the CO2 emissions from a one-to-one substitution between biofuels and fossil fuels is less than 26 percent, or less than 57 percent if long run effect is taken into account, then US biofuels production is likely to have resulted in a strong green paradox. These results indicate that subsidies for first generation biofuels, which yield a low level of per unit CO2 emission reduction compared to fossil fuels, might have contributed to additional net CO2 emissions over the study period.

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File URL: http://www.sciencedirect.com/science/article/pii/S0301421513011129
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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 68 (2014)
Issue (Month): C ()
Pages: 550-555

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Handle: RePEc:eee:enepol:v:68:y:2014:i:c:p:550-555
DOI: 10.1016/j.enpol.2013.11.006
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Quentin Grafton, R. & Kompas, Tom & Van Long, Ngo, 2012. "Substitution between biofuels and fossil fuels: Is there a green paradox?," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 328-341.
  2. Jon Strand, 2007. "Technology Treaties and Fossil-Fuels Extraction," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 129-142.
  3. Thomas Eichner & Rüdiger Pethig, 2011. "Carbon Leakage, The Green Paradox, And Perfect Future Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(3), pages 767-805, 08.
  4. Sinn, Hans-Werner, 2012. "The Green Paradox: A Supply-Side Approach to Global Warming," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016680, January.
  5. Reyer Gerlagh, 2011. "Too Much Oil," CESifo Economic Studies, CESifo, vol. 57(1), pages 79-102, March.
  6. van der Ploeg, Frederick & Withagen, Cees, 2012. "Is there really a green paradox?," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 342-363.
  7. Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 360-394, August.
  8. Chien, Taichen & Hu, Jin-Li, 2008. "Renewable energy: An efficient mechanism to improve GDP," Energy Policy, Elsevier, vol. 36(8), pages 3035-3042, August.
  9. Hoel, Michael, 2011. "The Green Paradox and Greenhouse Gas Reducing Investments," International Review of Environmental and Resource Economics, now publishers, vol. 5(4), pages 353-379, September.
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