By Shahab Sabahi
Energy and Environment - Policy analysis research group
The green paradox initially suggested by Strand 2007; Sinn 2008; Hoel 2008. The green paradox advocators are anxious that oil consumption may increase as a result of the climate change fear and the use of low carbon energy sources. They argue, in the response to the low carbon energy use, oil markets may anticipate a future reduction in demand and increase current supply. Therefore green technologies implicitly increase the climate change damages.
We should take it with a grain of salt.
The missing point is that an increase in current fossil fuel supply leads to fuel extraction costs increase, thus it will offset the green paradox. It means that demand for fossil fuel declines as its price rises. It is an imperfect energy substitutes.
I strongly argue that competitive low carbon energy supply is the key element to the climate change mitigation. Giving energy security issue as another crucial challenge and the limitations of fossil fuel energy supply, the use of low carbon energy is inevitable.
To combat climate change, energy security issue, we should combine carbon pricing policy along with a R&D and innovation policy. My analysis shows the carbon pricing policy is insufficient to accelerate transition to low carbon energy use.
Unavoidably with competitive low carbon energy supply, the demand and use of fossil fuel will drop, and is unlikely the green paradox occurs.
Instead, let’s shift our focus on an effective R&D policy implementation to support the development of low-carbon energy technologies with private-sector engagement.
Energy and Environment - Policy analysis research group
The green paradox initially suggested by Strand 2007; Sinn 2008; Hoel 2008. The green paradox advocators are anxious that oil consumption may increase as a result of the climate change fear and the use of low carbon energy sources. They argue, in the response to the low carbon energy use, oil markets may anticipate a future reduction in demand and increase current supply. Therefore green technologies implicitly increase the climate change damages.
We should take it with a grain of salt.
The missing point is that an increase in current fossil fuel supply leads to fuel extraction costs increase, thus it will offset the green paradox. It means that demand for fossil fuel declines as its price rises. It is an imperfect energy substitutes.
I strongly argue that competitive low carbon energy supply is the key element to the climate change mitigation. Giving energy security issue as another crucial challenge and the limitations of fossil fuel energy supply, the use of low carbon energy is inevitable.
To combat climate change, energy security issue, we should combine carbon pricing policy along with a R&D and innovation policy. My analysis shows the carbon pricing policy is insufficient to accelerate transition to low carbon energy use.
Unavoidably with competitive low carbon energy supply, the demand and use of fossil fuel will drop, and is unlikely the green paradox occurs.
Instead, let’s shift our focus on an effective R&D policy implementation to support the development of low-carbon energy technologies with private-sector engagement.
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