<p>Two things:</p>

<ol>
<li>The price reduction on the polluting good helps consumers of the polluting good, but also hurts producers of the polluting good. This results in less output and, in the extreme, market exit by the least-efficient polluting firms. A full analysis would be needed to show which effect wins in the end as far as overall emissions go.</li>
<li>This is accelerated by imposing a Pigouvian tax on the polluter, both by raising the price of production for polluting firms and through revenue-recycling (which, when done properly, either raises incomes, accelerates the fall in price of green energy options, or some mix of both).</li>
</ol>

<p>Of course, this is all airy-fairy stuff. A Pigouvian tax is challenging to enact, because on the global scale, enacting one is a kind of Prisoner's Dilemma. Hence output-based allocation systems for high-emitting, trade-exposed industries right or wrongly advocated on the grounds of "competitiveness".</p>

CC BY-SA 4.0
2019-12-02T22:20:08.013Z
2019-12-02T22:20:08.013Z
heh
<p>Your intuition is correct, actually switching from dirty good to clean good will also increase demand for clean good so price there might increase as well. However, this does not mean doing some voluntary change could not help as it also depends on how the quantity demanded changes with price (elasticity of demand). So switching is not necessarily unhelpful. </p>

<p>However, at the same time it is also only a partial solution. In order to fully  internalize the externality it’s necessary to apply Piguvian tax to the dirty good at a level that fully internalizes the externality to people consuming the good.</p>

CC BY-SA 4.0
2019-12-02T11:51:41.227Z
"The full solution" - for me the solution would be to remove **FREE ALLOWANCES** - https://ec.europa.eu/clima/policies/ets/allowances_en - if someone was polluting in the past, now they have permits to pollute for free. I believe that if all the energy was treated equally it would make CO2 heavy operations more expensive, therefore less competitive.
Mars Robertson
CC BY-SA 4.0
2019-12-02T11:58:28.583Z
@MarsRobertson yes that’s definitely bad. That’s why I said that the full solution is to use Piguvian taxation and why I did not say that the solution is to hand out free pollution permits based on historical data
1muflon1
CC BY-SA 4.0
2019-12-02T15:41:32.413Z
I was discussing on the syntax semantics level - "the full solution" vs "the solution" - I don't think taxation is the way, I think that deregulation (removing free allowances) is the way. I haven't run a large scale economic simulation yet but I thought about it a lot in my book: https://genesis.re/book (it's **FREE**, information always wants to be **FREE**)
Mars Robertson
CC BY-SA 4.0
2019-12-02T15:51:50.360Z
@MarsRobertson let me put it this way in standard economic analysis to fully solve the externality you need to impose some Piguvian tax. I was not making value judgements, those are outside the realm of economics... but within the confines of economics the Piguvian taxes are full solution in a sense they fully correct for negative externality. Maybe full was not fortunate wording I edited my answer to “in order to fully internalize externality”
1muflon1
CC BY-SA 4.0
2019-12-02T10:44:34.723Z
2019-12-02T15:53:07.760Z
2019-12-02T15:53:07.760Z
1muflon1
<p>When people opt for residential solar energy, in most cases the most dirty energy that is called into the grid at peak daytime hours is the first energy to be eliminated by conversion to solar.  So the first people to join solar can make the greatest contribution towards a cleaner, climate resilient atmosphere.  The catch is that climate is one of those things that requires the participation of the greater majority, not just a small segment.  Consider economies of scale, though, above supply-demand, since as more home owners enter the solar market, the more the production costs can come down and make solar a better choice price-wise compared to dirty energy.  I was personally motivated to invest in solar panels when the cost per kilowatt was high, in order to increase the production and spur the suppliers to invest in more advanced solar technologies.</p>

CC BY-SA 4.0
2024-03-07T06:19:43.420Z
2024-03-07T06:19:43.420Z
Gwendolyn Anderson
<p>Higher demand for green energy =less demand for other energy it is true , but demand for  energy in developing countries is so high that any energy  whether it is green or not  , it's not their fault or unawareness it is their necessity , green energy costs more as the cost of green infrastructure ( maintenance , capital infrastructure ) is huge .
Eco tax  , regenerative industry models , secondhand good industries, carbon credits for industries  could make a difference in climate change .
German eco tax initiative in 2003, California's carbon cap- trade scheme in 2013 are proofs that green energy contributes to climate change</p>

CC BY-SA 4.0
2020-09-02T11:42:17.690Z
Solar is chaper than coal these days?
Mars Robertson
CC BY-SA 4.0
2020-09-02T12:13:10.103Z
Per unit cost is low but cost of equipment , maintenance is high
Cherry
CC BY-SA 4.0
2020-09-02T13:44:09.113Z
I think both CAPEX and OPEX is now lower.
Mars Robertson
CC BY-SA 4.0
2020-09-02T14:15:21.263Z
In developing countries it needs to import most of such equipment , and there are very less incentives example - india there is high scope  for solar energy production but there are very limited companies which produce those , developing  countries spend very less on R&D , due do buget constraints . Operating costs more because we need to even import materials which needed to be changed frequently for operation like batteries and pannel parts
Cherry
CC BY-SA 4.0
2020-09-04T14:20:37.190Z
We can always find some factual data to verify these claims... Panels and batteries have 10+ years lifespan and require minimal maintenance?
Mars Robertson
CC BY-SA 4.0
2020-08-29T12:20:07.730Z
2020-08-29T12:20:07.730Z
Cherry
<p>I'm not sure if an individual choosing a "green energy supplier" is making any difference.</p>

<p>My <em>(potentially naive, uneducated)</em> logic is as follows: </p>

<p><strong><code>higher demand for green energy = less demand for other energy</code></strong></p>

<p>Less demand, therefore lower price, those who are polluting the most now have fewer incentives to switch. Supply and demand, elementary market forces.</p>

<p>I would like to better understand if choosing green energy makes any difference?</p>

<hr>

<p><strong>Personal note:</strong> I'm in the camp of effective altruism. In my version of reality, giving £1 to a homeless is a selfish "feel good" act that does solve the underlying problem of education, employability, affordable housing, mental health support, resilience and life skills.</p>

<supply-and-demand><energy-economics><nonrenewable-resources><climate-change>
Are businesses and individuals buying clean / green / renewable energy contribute to slowing down the climate change?
Mars Robertson
# Are businesses and individuals buying clean / green / renewable energy contribute to slowing down the climate change?

(Asked by: username_0 on 2019-12-02)

I'm not sure if an individual choosing a "green energy supplier" is making any difference.

My *(potentially naive, uneducated)* logic is as follows:

**`higher demand for green energy = less demand for other energy`**

Less demand, therefore lower price, those who are polluting the most now have fewer incentives to switch. Supply and demand, elementary market forces.

I would like to better understand if choosing green energy makes any difference?

---

**Personal note:** I'm in the camp of effective altruism. In my version of reality, giving £1 to a homeless is a selfish "feel good" act that does solve the underlying problem of education, employability, affordable housing, mental health support, resilience and life skills.

**Tags:** supply-and-demand, energy-economics, nonrenewable-resources, climate-change

---

## 4 answers

### Answer by username_1 on 2019-12-02. Score: 1

Two things:

1. The price reduction on the polluting good helps consumers of the polluting good, but also hurts producers of the polluting good. This results in less output and, in the extreme, market exit by the least-efficient polluting firms. A full analysis would be needed to show which effect wins in the end as far as overall emissions go.
2. This is accelerated by imposing a Pigouvian tax on the polluter, both by raising the price of production for polluting firms and through revenue-recycling (which, when done properly, either raises incomes, accelerates the fall in price of green energy options, or some mix of both).

Of course, this is all airy-fairy stuff. A Pigouvian tax is challenging to enact, because on the global scale, enacting one is a kind of Prisoner's Dilemma. Hence output-based allocation systems for high-emitting, trade-exposed industries right or wrongly advocated on the grounds of "competitiveness".


---

### Answer by username_2 on 2019-12-02. Score: 1

Your intuition is correct, actually switching from dirty good to clean good will also increase demand for clean good so price there might increase as well. However, this does not mean doing some voluntary change could not help as it also depends on how the quantity demanded changes with price (elasticity of demand). So switching is not necessarily unhelpful.

However, at the same time it is also only a partial solution. In order to fully internalize the externality it’s necessary to apply Piguvian tax to the dirty good at a level that fully internalizes the externality to people consuming the good.

> **Comments:**
> **username_0**: "The full solution" - for me the solution would be to remove **FREE ALLOWANCES** - https://ec.europa.eu/clima/policies/ets/allowances_en - if someone was polluting in the past, now they have permits to pollute for free. I believe that if all the energy was treated equally it would make CO2 heavy operations more expensive, therefore less competitive.  
> **username_2**: @MarsRobertson yes that’s definitely bad. That’s why I said that the full solution is to use Piguvian taxation and why I did not say that the solution is to hand out free pollution permits based on historical data  
> **username_0**: I was discussing on the syntax semantics level - "the full solution" vs "the solution" - I don't think taxation is the way, I think that deregulation (removing free allowances) is the way. I haven't run a large scale economic simulation yet but I thought about it a lot in my book: https://genesis.re/book (it's **FREE**, information always wants to be **FREE**)  
> **username_2**: @MarsRobertson let me put it this way in standard economic analysis to fully solve the externality you need to impose some Piguvian tax. I was not making value judgements, those are outside the realm of economics... but within the confines of economics the Piguvian taxes are full solution in a sense they fully correct for negative externality. Maybe full was not fortunate wording I edited my answer to “in order to fully internalize externality”  

---

### Answer by username_3 on 2024-03-07. Score: 0

When people opt for residential solar energy, in most cases the most dirty energy that is called into the grid at peak daytime hours is the first energy to be eliminated by conversion to solar. So the first people to join solar can make the greatest contribution towards a cleaner, climate resilient atmosphere. The catch is that climate is one of those things that requires the participation of the greater majority, not just a small segment. Consider economies of scale, though, above supply-demand, since as more home owners enter the solar market, the more the production costs can come down and make solar a better choice price-wise compared to dirty energy. I was personally motivated to invest in solar panels when the cost per kilowatt was high, in order to increase the production and spur the suppliers to invest in more advanced solar technologies.


---

### Answer by username_4 on 2020-08-29. Score: 0

Higher demand for green energy =less demand for other energy it is true , but demand for energy in developing countries is so high that any energy whether it is green or not , it's not their fault or unawareness it is their necessity , green energy costs more as the cost of green infrastructure ( maintenance , capital infrastructure ) is huge .
Eco tax , regenerative industry models , secondhand good industries, carbon credits for industries could make a difference in climate change .
German eco tax initiative in 2003, California's carbon cap- trade scheme in 2013 are proofs that green energy contributes to climate change

> **Comments:**
> **username_0**: Solar is chaper than coal these days?  
> **username_4**: Per unit cost is low but cost of equipment , maintenance is high  
> **username_0**: I think both CAPEX and OPEX is now lower.  
> **username_4**: In developing countries it needs to import most of such equipment , and there are very less incentives example - india there is high scope  for solar energy production but there are very limited companies which produce those , developing  countries spend very less on R&D , due do buget constraints . Operating costs more because we need to even import materials which needed to be changed frequently for operation like batteries and pannel parts  
> **username_0**: We can always find some factual data to verify these claims... Panels and batteries have 10+ years lifespan and require minimal maintenance?  

---

