Renewable energy subsidies may worsen climate change by hastening fossil fuel extraction
The study explores how promoting renewable energy over fossil fuels might actually speed up climate change in some cases. Subsidies for renewable energy can sometimes lead to increased extraction of fossil fuels, causing more harm to the environment than anticipated. This happens because subsidies can lower the demand for fossil fuels at current prices but also lower the price of fossil fuels, which then makes them more attractive and leads to more extraction. The outcome depends on how people respond to changes in prices. So, supporting renewable energy isn't always a clear-cut solution to reducing environmental damage.