The so-called “Green Paradox”

Global warming is rising; humanity must act urgently. Some countries have limited their CO₂ emissions through the Kyoto Protocol. Despite this, projections for global CO₂ emissions are to go up in 2018 by 2.7%. In the so-called “Green Paradox”, Sinn 2012 is promoting a supply side approach to reduce global warming. The temporal allocation of resource production is a portfolio optimization issue. The basic assumption made by Sinn is that resource owners behave as described by Hotelling, 1931. For the world petroleum market, it is being demonstrated that only the behavior of a part of the producers (e.g. Saudi Arabia) can be explained by the theory established by Hotelling. Therefore, the supply side approach outlined by Sinn, a tax on oil production, which is now high and declines over time, would incentivizes a constant increase in the oil production, which would increase CO₂ emission further.