Buy Coal or Kick-Start Green Innovation? Energy Policies in an Open Economy
| Autor: | Tania Theoduloz, Giulia Valacchi, Chiara Ravetti |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Economics and Econometrics
Energy Fossil fuels Natural resource economics business.industry Supply-side policies 05 social sciences Fossil fuel 0211 other engineering and technologies Subsidy 02 engineering and technology Management Monitoring Policy and Law Energy policy Renewable energy Greenhouse gas 0502 economics and business Trade Directed technical change Market price Production (economics) Open economy 050202 agricultural economics & policy 021108 energy Business |
| Zdroj: | Environmental and Resource Economics. 77:95-126 |
| ISSN: | 1573-1502 0924-6460 |
| DOI: | 10.1007/s10640-020-00455-8 |
| Popis: | This paper analyses two unilateral policies available to countries that want to rapidly curb carbon emissions in the global economy, but do not own any fossil fuel resources. If fossil fuel owners do not cooperate in $$\hbox {CO}_2$$ emission reduction efforts, the only strategy to reduce their fossil fuels’ use is to exploit the interconnectedness of production given by international trade. We compare a Pigouvian approach, namely a subsidy for renewable energy prices, and a Coasian supply-side strategy, buying extractive rights over fossil fuel deposits abroad. Using a dynamic North–South trade model with endogenous innovation, we show how these policies, designed to prevent an environmental disaster, have different cost and welfare profiles. If fossil fuel deposits can be purchased at their market price, the supply-side policy achieves the highest welfare. If instead the fossil fuel owners require a full compensation for their income loss, subsidies for renewable energy inputs can result in higher welfare, but only if the resource-rich region has less advanced technologies for green energy production than the countries implementing the policy. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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