Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities

Gerlagh, Reyer; Kverndokk, Snorre; Rosendahl, Knut Einar

doi:10.1007/s10640-009-9271-y

Cited by 125 publications

(88 citation statements)

References 32 publications

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“…Second, the rapid emission reductions shown by the model may be difficult to realise due to political and institutional inertia. It should be noted that also different assumptions on the main drivers of technology change may play a role (see also Gerlagh et al 2009 andvan Vuuren et al 2004 for a discussion of optimal timing of climate policy). To account for these factors, an analysis of the transitions at the country level would be an interesting topic for future research (e.g.…”

Section: Discussionmentioning

confidence: 99%

Early action on Paris Agreement allows for more time to change energy systems

et al. 2017

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The IMAGE integrated assessment model was used to develop a set of scenarios to evaluate the Nationally Determined Contributions (NDCs) submitted by Parties under the Paris Agreement. The scenarios project emissions and energy system changes under (i) current policies, (ii) implementation of the NDCs, and (iii) various trajectories to a radiative forcing level of 2.8 W/m 2 in 2100, which gives a probability of about two thirds to limit warming to below 2°C. The scenarios show that a cost-optimal pathway from 2020 onwards towards 2.8 W/m 2 leads to a global greenhouse gas emission level of 38 gigatonne CO 2 equivalent (GtCO 2 eq) by 2030, equal to a reduction of 20% compared to the 2010 level. The NDCs are projected to lead to 2030 emission levels of 50 GtCO 2 eq, which is still an increase compared to the 2010 level. A scenario that achieves the 2.8 W/m 2 forcing level in 2100 from the 2030 NDC level requires more rapid transitions after 2030 to meet the forcing target. It shows an annual reduction rate in greenhouse gas emissions of 4.7% between 2030 and 2050, rapidly phasing out unabated coal-fired power plant capacity, more rapid scale-up of low-carbon energy, and higher mitigation costs. A bridge scenario shows that enhancing the ambition level of NDCs before 2030 allows for a smoother energy system transition, with average annual Climatic Change (2017)

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Section: Discussionmentioning

confidence: 99%

Early action on Paris Agreement allows for more time to change energy systems

et al. 2017

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“…In the presence of knowledge market imperfection however, the carbon tax level should be greater than that originating from an exogenous technical change. In particular, the carbon tax should be set above the Pigouvian tax (Gerlagh et al 2009;Hart 2008).…”

Section: Effect Of Itc On the Path Of Environmental Policy And Path Dmentioning

confidence: 99%

Innovation, Diffusion, Growth and the Environment: Taking Stock and Charting New Directions

Sarr

Noailly

2017

Environ Resource Econ

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The objective of this article is to provide a succinct review of the main developments in the field of research on the economics of growth, innovation, diffusion and the environment. We focus on the last fifteen to twenty years of scientific advances in the field as this corresponds to: (i) the consensus on the theoretical side on endogenous economic growth modelling, and (ii) the growing empirical work on innovation and diffusion due to the development of patent data. As very good reviews already exist in the literature, we only provide a brief and non-exhaustive discussion aiming at taking stock of some recent developments and charting new issues for a future research agenda.

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“…In a follow-up paper, Golombek and Hoel (2008) find that the price of carbon should differ across heterogeneous countries in the second-best agreement and they conclude that whether emission trading is welfare enhancing or not, is an empirical question. Gerlagh et al (2009), using a model without spillovers but with finite patent lifetime, show that the difference with the Pigovian tax should mimic the optimal research subsidy or tax. In fact, when the technology externality is not regulated by an explicit targeted policy, the equilibrium level of innovation tends to be lower than first-best Hoel, 2004, 2005).…”

Section: Contribution Of Existing Literaturementioning

confidence: 99%

Do technology externalities justify restrictions on emission permit trading?

Cian

Tavoni

2012

Resource and Energy Economics

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a b s t r a c tInternational emission trading is an important flexibility mechanism, but its use has been often restricted on the ground that access to international carbon credits can undermine the domestic abatement effort reducing the incentive to innovate and, eventually, lowering the pace of climate policy-induced technological change. This paper examines the economics that is behind these concerns by studying how a cap to the trade of carbon offsets influences innovation, technological change, and welfare. By using a standard game of abatement and R&D, we investigate the main mechanisms that shape these relationships. We also use a numerical integrated assessment model that features environmental and technology externalities to quantify how limits to the volume, the timing, and the regional allocation of carbon offsets affect climate policy costs and the incentive to invest in innovation and lowcarbon technologies.Results indicate that, for moderate caps on the amount tradable emissions permits and sufficiently high technology spillovers, global innovation and technical change would increase and that this additional innovative effort could lead to economic efficiency gains. The numerical analysis confirms that when constraints are close ଝ This paper is part of the research carried out by the Sustainable Development Programme of Fondazione Enrico Mattei. Financial contribution from the PLANETS project funded by the European Commission under the 7th framework programme is gratefully acknowledged. The usual disclaimer applies. We would like to especially thank Prof. Sjak Smulders for the many comments and suggestions which have helped to considerably improve this manuscript.*

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Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities

Abstract: Climate change, Environmental policy, Technological change, Research and development, H21, O30, Q42,

Cited by 125 publications

References 32 publications

Early action on Paris Agreement allows for more time to change energy systems

Early action on Paris Agreement allows for more time to change energy systems

Innovation, Diffusion, Growth and the Environment: Taking Stock and Charting New Directions

Do technology externalities justify restrictions on emission permit trading?

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