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Unformatted text preview: of fossil fuel resources do not concern themselves with the climate. Climate-theoretical models, in turn,
do not concern themselves with the extraction of such resources; they are in fact atemporal models that, by their very nature, are not in
a position to analyse decision issues that have an intertemporal dimension. Only now, thanks to the influence of the current German
debate, a bit of movement is becoming apparent in the model front. This silence goes hand in hand with the acknowledged difficulty
of being able to do something in this regard at all.What we in Europe and Germany have set in motion with untold billions invested is
geared at gradually reducing demand for fossil fuels by developing alternative energy sources and strategies. The range of initiatives
goes from biofuels through wind power to better insulating homes and capping vehicles’ CO2 emissions. The measures to reduce
consumption exert an increasingly stronger downward pressure upon the world’s fossil fuel market price and dampen the rate of
increase in such prices. Resource owners regard this development with concern.They rightly fear the erosion of the rate of capital
gains on the resources still in situ, moving them to react by bringing forward their extraction plans and converting a larger portion of
their wealth into cash and securing it as financial capital. They thus increase their fossil fuel supply when demand for them decreases.
This is the green paradox: environmental policies that turn increasingly greener over time operate like announced expropriations. They
prompt resource owners to try to escape this by accelerating extraction of their fossil fuels, which in turn speeds up the warming of the
planet. Small wonder then that the massive efforts of Europeans have delayed the peaking of the world’s carbon dioxide emissions
curve to the future.In fact, they have not been able to cause even the tiniest dip in this curve. By saving ever more energy we are
raising fears of the future among resource owners and leading them to increase the extraction rate. T his has been music in the ears of
Americans, Chinese and all other environmental sinners. They have enjoyed the resulting lower energy prices and raised their
consumption by even more than we have reduced ours. 314 Oil DDW 2012 1 Yes Leakage – Oil 315
Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Unilateral oil demand reductions are offset by emissions from globally cheaper
van der Werf, Wageningen University, and Di Maria, Senior Lecturer in the Department of Economics at the University of
Edwin van der Werf, Wageningen University, and Corrado Di Maria, Senior Lecturer in the Department of Economics at the
University of Birmingham, 5-11, [“Unintended detrimental effects of environmental policy: The green paradox and beyond,” CESIFO
WORKING PAPER NO. 3466 CATEGORY 10: ENERGY AND CLIMATE ECONOMICS, papers.ssrn.com/sol3/papers.cfm?
abstract_id=1855899] E. Liu
The energy market channel is based on the supply and demand re...
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This note was uploaded on 01/30/2013 for the course ECON 101 taught by Professor Burke during the Spring '13 term at Southern Arkansas University.
- Spring '13
- The American