New OxCARRE Research: Second-Best Renewable Subsidies to De-Carbonize the Economy: Commitment and the Green Paradox

A new OxCARRE research paper is available from

Armon Rezai (Vienna University of Economics and Business [wu.ac.at]) and
Frederick van der Ploeg (OxCarre, oxcarre.ox.ac.uk)

writing on

Second-Best Renewable Subsidies to De-Carbonize the Economy: Commitment and the Green Paradox
Abstract

Climate change must deal with two market failures: global warming and learning by doing in renewable use. The first-best policy consists of an aggressive renewables subsidy in the near term and a gradually rising and falling carbon tax. Given that global carbon taxes remain elusive, policy makers have to use a second-best subsidy. In case of credible commitment, the second-best subsidy is set higher than the social benefit of learning. It allows the transition time and peak warming close to first-best levels at the cost of higher fossil fuel use (weak Green Paradox). If policy makers cannot commit, the second-best subsidy is set to the social benefit of learning. It generates smaller weak Green Paradox effects, but the transition to the carbon-free takes longer and cumulative carbon emissions are higher. Under first-best and second best with pre-commitment peak warming is 2.1 - 2.3 °C, under second best without commitment 3.5°C, and without any policy temperature 5.1°C above pre-industrial levels. Not being able to commit yields a welfare loss of 95% of initial GDP compared to first best. Being able to commit brings this figure down to 7%.

Paper available here [oxcarre.ox.ac.uk] 

Sovereign investor models. A new report.

From the Harvard Kennedy School and Center for International Development at Harvard University, a new report has coming out by Khalid A. Alsweilem (The Belfer Center for Science and International Affairs Harvard Kennedy School), Angela Cummine (British Academy Post-doctoral Fellow University of Oxford), Malan Rietveld (Investec Investment Institute & The Center for International Development Harvard Kennedy School) and Katherine Tweedie (Investec Investment Institute).

Sovereign investor models: Institutions and policies for managing sovereign wealth

The primary aim of the report is to identify the leading practices among existing funds and establish an analytical framework for assessing the critical policy and institutional aspects that legislators, policymakers and practitioners need to consider in establishing a new SWF or reforming an existing one.

The authors credit the academic research and experts they've used to write report, which includes work from people at OxCARRE.