Is there a green paradox?
Link to article:
Authors:
Hoel, Michael
Year:
2010
Reference:
Memorandum
Number in series: 13
Summary
A sufficiently rapidly rising carbon tax may increase near-term emissions compared with the case of no carbon tax. Even so, such a carbon tax path may reduce total costs related to climate change, since the tax may reduce total carbon extraction. A government cannot commit to a speci.c carbon tax rate in the distant future. For reasonable assumptions about expectation formation, a higher present carbon tax will reduce near-term carbon emissions. Moreover, whatever the expectations about future tax rates are, near-term emissions will decline for a sufficiently high carbon tax. However, if the near-term tax rate for some reason is set below its optimal level, increased concern for the climate may change taxes in a manner that increases near-term emissions.
JEL:
Q31, Q38, Q41, Q48, Q54, Q58
Keywords:
climate change, exhaustible resources, green paradox, carbon tax
Project:
Oppdragsgiver: Norges forskningsråd, PETROSAMOppdragsgivers prosjektnr.: 184739
Frisch prosjekt: 3162 - Petroleum industry research in economics and economic management
