I study the dynamics of greenhouse gas emissions following unexpected increases in oil prices from supply disruptions. I find that $CO_2$-equivalent atmospheric concentrations decrease driven by a decline in oil and gas consumption. Solar energy does not take-up contrarily to common expectations.
I introduce a new empirical strategy to provide the first estimate of the aggregate elasticity of substitution between polluting and non-polluting energy. Exploiting variation in US states’ energy mixes, I estimate an elasticity of 0.50 — much lower than most calibrations assume. Gross complementarity between energy sources complicates the green transition and significantly raises the economic costs of climate change.