Biofuel Mandating and the Green Paradox

CentER Discussion Paper Series No. 2016-024

59 Pages Posted: 23 Jun 2016 Last revised: 13 Nov 2019

See all articles by Samuel J Okullo

Samuel J Okullo

Potsdam-Institut für Klimafolgenforschung (PIK)

Frederic Reynes

VU University Amsterdam - Institute for Environmental Studies (IVM)

Marjan W. Hofkes

Vrije Universiteit Amsterdam

Multiple version iconThere are 2 versions of this paper

Date Written: November 11, 2019

Abstract

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. Ignoring the response of carbon-free suppliers to preannounced climate policies overestimates the green paradox. For EU-2020 and US-2022 calibrated biofuel mandating targets, simulations point to a robust 0.4-0.6 percent decline in premandate global crude oil supply, suggesting that concerns over the green paradox may have been overstated. Mandate design to mitigate the green paradox is also discussed.

Keywords: Green paradox, Climate change, Peak oil, Biofuel mandates, Unconventional

JEL Classification: C61, C7, H25, H32, Q28, Q35 , Q42, Q58

Suggested Citation

Okullo, Samuel J and Reynes, Frederic and Hofkes, Marjan W., Biofuel Mandating and the Green Paradox (November 11, 2019). CentER Discussion Paper Series No. 2016-024, Available at SSRN: https://ssrn.com/abstract=2799227 or http://dx.doi.org/10.2139/ssrn.2799227

Samuel J Okullo (Contact Author)

Potsdam-Institut für Klimafolgenforschung (PIK) ( email )

Telegrafenberg 31
Potsdam, Brandenburg 14473
Germany

Frederic Reynes

VU University Amsterdam - Institute for Environmental Studies (IVM) ( email )

De Boelelaan 1115
Amsterdam, 1081 HV
Netherlands

Marjan W. Hofkes

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

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