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Cutting Costs of Catching Carbon Intertemporal effects under imperfect climate policy

Lenke til artikkel:

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Forfattere:

Hoel, Michael and Svenn Jensen

År:

2010

Referanse:

Memorandum
Nummer i serie: 19

Summary

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.

Nøkkelord:

climate change, exhaustible resources, carbon capture and storage, renewable energy, green paradox

JEL:

Q30, Q42, Q54

Prosjekt info:

Oppdragsgiver: Norges forskningsråd, PETROSAM
Oppdragsgivers prosjektnr.: 184739
Frisch prosjekt: 3162 - Petroleum industry research in economics and economic management