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

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Listed author(s):
  • Hoel, Michael

    ()

    (Dept. of Economics, University of Oslo)

  • Jensen, Svenn

    ()

    (Ragnar Frisch Centre for Economic Research)

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File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2010/Memo-19-2010.pdf
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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
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
Web page: http://www.oekonomi.uio.no/indexe.html
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Keywords: climate change; exhaustible resources; carbon capture and storage; renewable energy; green paradox;

Other versions of this item:

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 and their Management; Global Warming

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