Green Growth, Green Paradox and the global economic crisis

A Schumpeterian case can be made for boosting Green Growth in a global economic crisis. The best way to achieve this is a combination of R&D subsidies to redirect growth from polluting to clean economic activities and a credible, rising carbon tax to speed up the transition to the carbon-free era. If a carbon tax is infeasible, renewables subsidies might be a second-best alternative to reduce the duration of the fossil fuel era and curb cumulative carbon emissions despite some adverse, short-run Green Paradox effects.

► A Schumpeterian case can be made for boosting Green Growth in a global economic crisis. ► The best way to achieve this is a combination of R&D subsidies and a rising carbon tax. ► This redirects growth towards clean activities and speeds up the transition to the carbon-free era. ► If a carbon tax is infeasible, renewables subsidies might be a second-best alternative. ► This shortens the fossil fuel era and curbs cumulative emissions despite higher fossil fuel use in the short run.