Announcing Climate Policy: Can a Green Paradox Arise Without Scarcity?

By Sjak A. Smulders, Y. Tsur, A. Zemel. Social Science Research Network, 2012

166 citations recorded by the source corpus.

Unintended consequences of a pre-announced climate policy are studied within a framework that allows for competition between polluting and clean energy sources. We show that early announcement of a carbon tax gives rise to a “green-paradox,” in that it increases emissions in the interim period (between announcement and actual implementation), irrespective of the scarcity of fossil fuels. The paradoxical outcome is driven by consumption-saving tradeoffs facing households who seek to smooth consumption over time and holds both when the announced implementation date is taken as a credible threat and when households are skeptical about the (political) will or capability of the government to implement the policy as announced.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/388e4342f6a9e5903cb947b22d6b3a5d1538949d

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In Economics and Econometrics

In Renewable Energy, Sustainability and the Environment

Citations in the corpus

Imperfect Environmental Policy and Polluting Emissions: The Green Paradox and Beyond (2012, background): “…standard strictly concave instantaneous utility function and have to decide at each point in time how much to invest and how much to consume.12 12 Smulders et al. (2010) include endogenous investment in a backstop energy source, but this does not affect the main results regarding the timing of…”
An Introduction to the Green Paradox: The Unintended Consequences of Climate Policies (2015, background): “(16)Smulders et al. (2012) show that there can be a green paradox in the absence of scarcity due to the effects of climate policy on capital accumulation and, ultimately, energy use.”
Global Warming and the Green Paradox: A Review of Adverse Effects of Climate Policies (2015, background): “The other articles are Sinn (2015), which provides introductory comments; Jensen, Mohlin, Pittel, and Sterner (2015), which introduces the symposium and discusses the intuition behind and importance of the Green Paradox; and Long (2015), which discusses the Green Paradox in the context of open econo”