Defining the Abatement Cost in Presence of Learning-by-Doing: Application to the Fuel Cell Electric Vehicle

Abstract

The transition of a sector from a pollutant state to a clean one is studied. A green technology, subject to learning-by-doing, progressively replaces an old one. The notion of abatement cost in this dynamic context is fully characterized. The theoretical, dynamic optimization, perspective is linked to simple implementation rules. The practical “deployment” perspective allows to study sub-optimal trajectories. Moreover, the analysis of the launching date provides a definition of a dynamic abatement cost easy to use for evaluation of real-world policy options. The case of Fuel Cell Electric Vehicles offers an illustration of the proposed methodology.

Keywords: dynamic abatement costs, learning by doing, fuel cell electric vehicles

JEL Classification: Q550, Q420, C610