Carbon sequestration, economic policies and growth

While all three tools foster CCS activity they generally have contrasting effects on resource extraction, carbon emissions, output and consumption. The carbon tax postpones resource extraction whereas the two subsidies accelerate it. Although the tax decreases short-term carbon emissions, the two subsidies can increase them, thus yielding a green paradox. The tax has a negative impact on the levels of output and consumption in the short-term, unlike the subsidies. The tax generally fosters growth whereas the subsidies reduce it; however, when the weight of the CCS sector in the economy is high, these impacts can be reversed.