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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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    Cited by:

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    3. Peter Newell & Angela Carter, 2024. "Understanding supply-side climate policies: towards an interdisciplinary framework," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 24(1), pages 7-26, March.
    4. Taran Fæhn & Cathrine Hagem & Lars Lindholt & Ståle Mæland & Knut Einar Rosendahl, 2017. "Climate Policies in a Fossil Fuel Producing Country: Demand versus Supply Side Policies," The Energy Journal, , vol. 38(1), pages 77-102, January.
    5. Gavenas, Ekaterina & Rosendahl, Knut Einar & Skjerpen, Terje, 2015. "CO2-emissions from Norwegian oil and gas extraction," Energy, Elsevier, vol. 90(P2), pages 1956-1966.
    6. Sen, Suphi & von Schickfus, Marie-Theres, 2020. "Climate policy, stranded assets, and investors’ expectations," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    7. Pethig, Rüdiger & Eichner, Thomas, 2015. "Unilateral mitigation of climate damage via purchase of fossil fuel deposits," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113010, Verein für Socialpolitik / German Economic Association.
    8. Suphi Sen & Marie-Theres von Schickfus, 2017. "Will Assets be Stranded or Bailed Out? Expectations of Investors in the Face of Climate Policy," ifo Working Paper Series 238, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Cathrine Hagem & Halvor Briseid Storrøsten, 2019. "Supply‐ versus Demand‐Side Policies in the Presence of Carbon Leakage and the Green Paradox," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 379-406, January.
    10. Mark Schopf, 2016. "Unilateral Supply Side Policies and the Green Paradox," Working Papers Dissertations 28, Paderborn University, Faculty of Business Administration and Economics.
    11. Thomas Eichner & Rüdiger Pethig, 2015. "Buy coal to mitigate climate damage and benefit from strategic deposit action," Volkswirtschaftliche Diskussionsbeiträge 177-15, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    12. Desroziers, Adrien & Kirat, Yassine & Reisinezhad, Arsham, 2025. "Carbon curse: As you extract, so you will burn," Energy Economics, Elsevier, vol. 148(C).
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    Keywords

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    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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