REDD and Clean Technologies Innovations: Is There a Trade-Off?

6 Pages Posted: 28 Mar 2012

See all articles by Valentina Bosetti

Valentina Bosetti

Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change

Date Written: January 16, 2012

Abstract

A key policy question when discussing REDD is how to balance low-cost forestry emission reductions, available in the near term, with investments to drive technological innovation in energy, industry, and other sectors over the longer period. In this article we report a research effort showing that the link of REDD to an international carbon market is, as expected, economically efficient. In addition, provided that the climate policy is stringent (we explore here a 535 ppmv CO2e concentration target), the cost savings due to REDD should entail only a modest tradeoff in terms of reduced clean energy innovation. Reduced clean energy innovation could in principle handicap future efforts to reduce global emissions. However, this analysis suggests that the availability of REDD, in particular when combined with the possibility of banking emission allowances, could provide a head start on climate mitigation that is an aggregate hedge against uncertain future costs. Integrating REDD into global carbon markets could thus lower policy costs and facilitate more ambitious climate policies now and in the future.

Keywords: REDD, Technological Innovation

JEL Classification: Q23

Suggested Citation

Bosetti, Valentina, REDD and Clean Technologies Innovations: Is There a Trade-Off? (January 16, 2012). FEEM (Fondazione Eni Enrico Mattei), Review of Environment, Energy and Economics (Re3), January 2012, Available at SSRN: https://ssrn.com/abstract=2029587

Valentina Bosetti (Contact Author)

Bocconi University

Via Gobbi 5
Milan, 20136
Italy

CMCC - Euro Mediterranean Centre for Climate Change

via Augusto Imperatore, 16
Lecce, I-73100
Italy

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