ABSTRACT
This chapter explains into the details of the green paradox models, to unveil how they work and upon what assumptions they are founded. Van der Werf and Di Maria’s Hotelling model begins with a roster of assumptions about the depletion decisions of the operator. The Dasgupta Heal model is introduced to enable the producer to decide to cease extraction prior to complete depletion by contrasting the cost of extraction against the price of an alternative energy technology. For green paradox discussions, the Dasgupta Heal model has two unique effects. First, the model provides a point in time when fossil fuel will no longer be extracted due to its comparatively high costs. Second, the model enables some amount of fossil fuel to remain. Thomas Michielsen’s analysis of backstop technology provides for ready reference against the clean backstops of Dasgupta and Heal and against the dirty backstops of Heal.
