Imperfect climate policy unlikely to increase domestic emissions

VoxEU: By promising to reduce fossil fuel demand in the future, some claim that climate policies will induce supply side responses today; firms will pump out emissions now before demand restrictions tighten. However, this column argues that the ‘green paradox’ is a red herring. Evidence from US coal prices suggests that, in industrialised countries, there is little danger of an increase in domestic emissions in response to imperfect climate policies.