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Substitution between biofuels and fossil fuels: Is there a green paradox?

Kompas, Thomas; Long, Ngo Van; Grafton, Quentin


We show that (i) subsidies for renewable energy policies with the intention of encouraging substitution away from fossil fuels may accentuate climate change damages by hastening fossil fuel extraction, and that (ii) the opposite result holds under some specified conditions. We focus on the case of subsidies for renewable resources produced under increasing marginal costs, and assume that both the renewable resources and the fossil fuels are currently in use. Such subsidies have a direct effect...[Show more]

CollectionsANU Research Publications
Date published: 2012
Type: Journal article
Source: Journal of Environmental Economics and Management
DOI: 10.1016/j.jeem.2012.07.008


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