Carbon Taxing and Alternative Energy - Complements Rather Than Substitutes?
Summary:The transition to using alternative energy sources instead of fossil fuels will most likely be a very important part of mitigating climate change. Stimulating research on technology for using alternative energy sources is probably a good climate change mitigation policy. It may even seem that if the development of the ability to use alternative energy sources is fast enough, this could be a sufficient policy measure. It is however shown in this paper that policy measures aimed at speeding up the use of alternative energy sources and policy measures aimed at the use of fossil fuels (here represented by carbon taxing) are more of complements rather than substitutes.
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