Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.

Jaakkola N., van der Ploeg F. (2019). Non-cooperative and cooperative climate policies with anticipated breakthrough technology. JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT, 97, 42-66 [10.1016/j.jeem.2018.04.001].

Non-cooperative and cooperative climate policies with anticipated breakthrough technology

Jaakkola N.
;
van der Ploeg F.
2019

Abstract

Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.
2019
Jaakkola N., van der Ploeg F. (2019). Non-cooperative and cooperative climate policies with anticipated breakthrough technology. JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT, 97, 42-66 [10.1016/j.jeem.2018.04.001].
Jaakkola N.; van der Ploeg F.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/726023
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