Abstract
This paper studies the effect of changes in the backstop technology research intensity on the depletion of fossil fuels in the presence of world energy demand growth. According to the green paradox backstop technology research encourages fossil fuel owners to supply more of their resource in the near future because they anticipate that their resource will become obsolete before it is depleted. If demand for fossil fuels is increasing, fossil fuel owners react more strongly to efforts to develop a backstop technology to replace fossil fuels. Simulations show that including moderate (1.5%) yearly energy demand growth, magnifies the green paradox by approximately 50% in terms for how many years planned extractions and cumulative emissions increase in response to a change in backstop technology research intensity. With moderate energy demand growth it can be optimal for discount rates well under 3 percent not to subsidize backstop technology research.
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