Well-intended preannounced carbon mitigation policies can lead to adverse impacts such as the green paradox. This paper examines conditions impacting the prevalence of this phenomenon, when suppliers of carbon-free energy, similarly to carbon suppliers, can anticipate the implementation of preannounced carbon regulation. Neglecting the interim build-up of carbon-free capacity that responds to preannounced climate policies over-estimates the green paradox. For EU-2020 and US-2022 calibrated biofuel mandating targets, simulations point to a robust 0.4–0.6% decline in premandate global crude oil supply, suggesting that concerns over the green paradox may have been overstated. Mandate designs to mitigate the green paradox are also examined. Initially mild targets that are complemented by increasingly stringent ones are more effective at curbing the green paradox than ambitious but delayed targets.
Bibliographical noteFunding Information:
The authors acknowledge the financial support of the NWO’ s ACTS Sustainable Hydrogen Research Program . We thank Jos Bruggink, Reyer Gerlagh, Peter Kruse-Andersen, Karolina Ryszka, Sjak Smulders, Iivo Vehviläinen, and Aart de Zeeuw for helpful comments. Any remaining errors are the sole responsibility of the authors.
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- Carbon taxes
- Climate change
- Fuel mandates
- Green paradox
- Renewable energy subsidies