Emission trading and the role of learning-by-doing spillovers in the ''bottom-up'' energy-system ERIS model

Barreto, Leonardo; Klaassen, G.

doi:10.1504/ijetp.2004.004588

Cited by 25 publications

(13 citation statements)

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“…This formulation has received significant attention from the empirical and modelling literature in the recent past (see, for instance, Criqui, Klassen et al 2000;Bahn and Kypreos, 2003;Söderholm and Sundqvist, 2003;Barreto and Klaassen, 2004;Barreto and Kypreos, 2004;Klassen, Miketa et al 2005;Kypreos, 2007;Jamasab, 2007;Söderholm and Klassen, 2007). However, estimates of parameters controlling the learning processes vary significantly across available studies.…”

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confidence: 99%

The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model

et al. 2009

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JT03259314This paper uses the WITCH model, a computable general equilibrium model with endogenous technological change, to explore the impact of various climate policies on energy technology choices and the costs of stabilising greenhouse gas concentrations. Current and future expected carbon prices appear to have powerful effects on R&D spending and clean technology diffusion. Their impact on stabilisation costs depends on the nature of R&D: R&D targeted at incremental energy efficiency improvements has only limited effects, but R&D focused on the emergence of major new low-carbon technologies could lower costs drastically if successful -especially in the non-electricity sector, where such low-carbon options are scarce today. With emissions coming from multiple sources, keeping a wide range of options available matters more for stabilisation costs than improving specific technologies. Due to international knowledge spillovers, stabilisation costs could be further reduced through a complementary, global R&D policy. However, a strong price signal is always required.JEL classification: H0; H2; H3; H4; O3; Q32; Q43; Q54.Keywords: Climate policy; Energy R&D; Fund; Stabilisation costs. ++++++++++++++++ Le rôle de la R&D and de la diffusion des technologies dans l'atténuation du changement climatique : nouvelles perspectives à l'aide du modèle WITCHCet article utilise le modèle WITCH, un modèle d'équilibre général calculable à progrès technique endogène, afin d'explorer l'impact de diverses politiques climatiques sur les choix de technologies énergétiques et les coûts de stabilisation des concentrations de gaz à effet de serre. Il apparaît que les prix courants et anticipés du carbone ont des effets puissants sur la dépense en R&D et la diffusion des technologies propres. Leur impact sur les coûts de stabilisation dépend de la nature de la R&D : une R&D améliorant l'efficacité énergétique de façon incrémentale a des effets limités, mais une R&D visant à l'émergence de nouvelles technologies sobres en carbone pourrait drastiquement réduire les coûts en cas de succès -notamment dans le secteur non-électrique, où de telles options sobres en carbone sont aujourd'hui rares. Les émissions provenant de sources multiples, garder un éventail d'options aussi large que possible influence davantage les coûts de stabilisation qu'améliorer certaines technologies spécifiques. Du fait des externalités internationales liées à la R&D, les coûts de stabilisation peuvent être encore réduits par un politique complémentaire de R&D mondiale. Cependant, un signal de prix fort est toujours nécessaire.

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confidence: 99%

The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model

et al. 2009

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“…4 The sensitivity analysis with respect to the cost for unconventional oil resource in the reference scenario shows that the lower threshold levelized cost for unconventional oil resource below which the Solar PV is never preferred would be 140 $/kW-yr (around 44% of the base value in Table 1). In this case the threshold investment cost for unconventional oil extraction would be 193 $/kW.…”

Section: Numerical Resultsmentioning

confidence: 99%

“…The spatial pattern of technology diffusion is not thoroughly explored in the present models. In most bottom-up energysystems studies, a common simplification for incorporating spillovers is to assume that learning is dependent on R&D and physical capacity accumulated over all regions [4,6,7,9]. In addition, the degree of experience spillover among regions is expressed in terms of spillover coefficients that represent the fraction of the technology installations made in a region added to the cumulative experience in another region [3].…”

Section: Introductionmentioning

confidence: 99%

Model for development of energy technologies in technology-follower countries

Shafiei

2011

Energy Syst

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In this study, a comprehensive analytical tool for assessment of energy technologies and R&D resource allocation is developed taking into account the specific conditions of technology follower countries. The analytical instrument includes two interlinked models: technology assessment and optimal R&D resource allocation. Energy technology assessment and prioritization of new energy technologies are provided by a dynamic systems engineering optimization model of energy supply system. Then based on the economic and environmental impacts of technologies, optimal allocation of R&D resources for new technologies is estimated with the help of the R&D resource allocation model. This model is formulated as an optimal control problem and it considers the R&D activities and knowledge stock as the main control and state variables. This model maximizes the total net present value of resulting R&D benefits taking into account the dynamics of technological progress, knowledge and experience spillovers from advanced regions, technology adoption and R&D constraints. In this model, the role of degree of spillover, follower country's innovation capacity, knowledge complexity and absorption capacity is highlighted in the modeling of knowledge accumulation in follower countries. In this paper the mathematical formulation of the R&D resource allocation model and its linkage with the energy supply model will be described. Thereafter, the application of the interlinked models will be explained through a test case and the applicability of the energy R&D resource allocation model and its contribution to the profession of energy modeling will be concluded.

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“…This is done through an iterative procedure, which is capable of reproducing the outcome of a non-cooperative, simultaneous, open membership game with full information, and thus achieve a second-best Nash equilibrium. 5 (1)…”

Section: Energy Market Technology and Damage Effects In The Witch Mmentioning

confidence: 99%

“…Using bottom-up models of the energy sector, Barreto and Kypreos [6] and Barreto and Klaasen [5] show that technology spillovers can induce technical change and emission reduction outside the group of countries facing an emission constraint. Using a CGE model that links the energy sector to the rest of the general economy, Gerlagh and Kuik [21] estimate the rate of carbon leakage associated with the Kyoto Protocol and show that even for moderate levels of technology spillover, carbon leakage can become negative.…”

Section: Introductionmentioning

confidence: 99%

A Good Opening: The Key to Make the Most of Unilateral Climate Action

Bosetti

Cian

2013

Environ Resource Econ

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SummaryIn this paper we argue that when a subgroup of countries cooperate on emission reduction, the optimal response of non-signatory countries reflects the interaction between three potentially opposing factors, the incentive to free-ride on the benefits of cooperation, the incentive to expand the demand of fossil fuels, and the incentive to adopt cleaner technologies introduced by the coalition. Using an Integrated Assessment Model with a game theoretic structure we find that cost-benefit considerations would lead OECD countries to undertake a moderate, but increasing abatement effort (in line with the pledges subscribed in Copenhagen). Even if emission reductions are moderate, OECD countries find it optimal to allocate part of their resources to energy R&D and investments in cleaner technologies. International spillovers of knowledge and technology diffusion then lead to the deployment of these technologies in non-signatory countries as well, reducing their emissions. When the OECD group follows more ambitious targets, such as 2050 emissions that are 50% below 2005 levels, the benefits of technology externalities do not compensate the incentives deriving from the lower fossil fuels prices. This suggests that, when choosing their unilateral climate objective, cooperating countries should take into account the possibility to induce a virtuous behaviour in non-signatory countries. By looking at a twophase negotiation set-up, we find that free-riding incentives spurred by more ambitious targets can be mitigated by means of credible commitments for developing countries in the second phase, as they would reduce lock-in in carbon intensive technologies. Keywords Abstract PageIn this paper we argue that when a subgroup of countries cooperate on emission reduction, the optimal response of non-signatories countries reflects the interaction between three potentially opposing factors, the incentive to free-ride on the benefits of cooperation, the incentive to expand the demand of fossil fuels, and the incentive to adopt cleaner technologies introduced by the coalition. Using an Integrated Assessment Model with a game theoretic structure we find that cost-benefit considerations would lead OECD countries to undertake a moderate, but increasing abatement effort (in line with the pledges subscribed in Copenhagen). Even if emission reductions are moderate, OECD countries find it optimal to allocate part of their resources to energy R&D and investments in cleaner technologies. International spillovers of knowledge and technology diffusion then lead to the deployment of these technologies in non-signatory countries as well, reducing their emissions. When the OECD group follows more ambitious targets, such as 2050 emissions that are 50% below 2005 levels, the benefits of technology externalities do not compensate the incentives deriving from the lower fossil fuels prices.This suggests that, when choosing their unilateral climate objective, cooperating countries should take into account the possibility to induce a virtuous beha...

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Emission trading and the role of learning-by-doing spillovers in the ''bottom-up'' energy-system ERIS model

Cited by 25 publications

References 28 publications

The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model

The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model

Model for development of energy technologies in technology-follower countries

A Good Opening: The Key to Make the Most of Unilateral Climate Action

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