A Supply-Side Approach to Global Warming,
by Hans-Werner Sinn, published by MIT Press, 2012.
Professor Sinn’s green paradox is based on the assumption that “green” measures will encourage producers of fossil fuels to extract their products from the ground earlier rather than later. Announcing a future reduction in the demand for fossil fuels speeds up global warming. Fossil fuel extraction companies will not wait to extract their products from the ground, because the continuation of green policies will put ever increasing downwards pressure on the prices they can secure for fossil fuel. Thus the “green paradox” is that green measures will accelerate the extraction of fossil fuels and thus increase the carbon dioxide in the atmosphere rather than reduce it.
But the case for the existence of the green paradox is based entirely on assumptions and unverifiable economic theory, not on empirical evidence.
” in the social sciences, the worse the theory … the more it is likely to grip people’s minds. Universities are hot-beds of theory … . This activity is pointless without doing much damage, but every now and then one of these theories escapes … . and attacks the public like the plague: I mean that part of the public that writes or rules for a living, and who need above all to delude themselves and their masters that they know what they are talking about” (Routh, 1980, page 11).
This applies exactly to the green paradox, which is a figment of Professor Sinn’s imagination. There is therefore no good reason to take it into account in energy and environmental policy.
Reference: Guy Routh, The Morals of Pay, in Guy Routh, Dorothy Wedderburn and Barbara Wootton (Eds.), The Roots of Pay Inequalities, Low Pay Unit, London, 1980, page 11.
The full review is published in Energy and Environment,2012, vol23, Nos 2&3: 451-453.