The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model
Fondazione Eni Enrico Mattei (FEEM); Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change
Fondazione Eni Enrico Mattei (FEEM); Ca' Foscari University of Venice; CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division); IPCC; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Centre for European Policy Studies, Brussels; Green Growth Knowledge Platform; International Center for Climate Governance
Organization for Economic Co-Operation and Development (OECD)
Fondazione Eni Enrico Mattei (FEEM) ; Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC)
Fondazione Eni Enrico Mattei (FEEM); Princeton University - Princeton Environmental Institute
April 30, 2009
FEEM Working Paper No. 14.2009
CMCC Research Paper No. 63
This 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 for stabilisation costs more 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.
Number of Pages in PDF File: 42
Keywords: Climate policy, Energy R&D, Fund, Stabilisation costs
JEL Classification: H0, H2, H3, H4, O3, Q32, Q43, Q54
Date posted: May 4, 2009 ; Last revised: August 28, 2012
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