Green Paradox

Do the fundamental forces of fossil energy markets counteract second-best climate policies such that near-term CO2 emissions increase and mitigation costs escalate? This project assesses the significance of the Green Paradox argument by a) extending economic theory to clearly identify transmission channels of the Green Paradox and by b) quantifying these effects within a comprehensive numeric modelling framework. It includes an explicit consideration of reactions of resource suppliers to climate policies, the collection and inclusion of data on fossil fuel markets as well as costs of fossil fuel extraction and transportation, and numerical scenarios using the energy-economy-climate model REMIND.