Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 29/2008: Bush Meets Hotelling: Effects of Improved Renewable Energy Technology on Greenhouse Gas Emissions
Michael Hotel ()
Additional contact information
Michael Hotel: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Abstract: Fossil fuels are non-renewable carbon resources, and the extraction path of these resources depends both on present and future demand. When this “Hotelling feature”is taken into consideration, the whole price path of carbon fuel will shift downwards as a response to the reduced cost of the renewable substitute. An implication of this is that greenhouse gas emissions in the near future may increase as a response to the reduced cost of the renewable substitute. If this is the case, increased climate costs may outweigh the bene…ts of reduced costs of a substitute, thus reducing overall social welfare.
Keywords: Climate change; exhaustible resources; renewable energy
30 pages, December 2, 2008
Full text files
Memo-29-2008.pdf
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