Announcing climate policy: Can a Green Paradox arise without scarcity?
Smulders,Sjak A. Tsur,Y. Zemel,A.
Smulders,Sjak A.
Tsur,Y.
Zemel,A.
Abstract
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.
Description
Date
2012
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
SDG 7 - Affordable and Clean Energy, SDG 8 - Decent Work and Economic Growth, SDG 13 - Climate Action
Citation
Smulders, S A, Tsur, Y & Zemel, A 2012, 'Announcing climate policy : Can a Green Paradox arise without scarcity?', Journal of Environmental Economics and Management, vol. 64, no. 3, pp. 364-376. https://doi.org/10.1016/j.jeem.2012.02.007