G bohm 1993 if unilateral emission reduction policies

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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 fuel prices van der Werf, Wageningen University, and Di Maria, Senior Lecturer in the Department of Economics at the University of Birmingham, 11 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...
View Full Document

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.

Ask a homework question - tutors are online