Cutting Costs of Catching Carbon Intertemporal effects under imperfect climate policy
We use a two-period model to investigate intertemporal effects 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 com- parable cost reductions related to renewable energy. The finding rests on the incentives fossil resource owners face. With regulations of emis- sions 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.
Hoel, Michael and Svenn Jensen
Nummer i serie: 19
Q30, Q42, Q54
climate change, exhaustible resources, carbon capture and storage, renewable energy, green paradox