The Impact of Learning-by-Doing on the Timing and Costs of Co2 Abatement
23 Pages Posted: 20 Jun 2002
Date Written: May 2002
A particular ceiling on atmospheric CO2 concentrations can be maintained through a variety of emission pathways. Over the past decade, there has been considerable debate over the characteristics of a least-cost pathway. Some have suggested that a gradual departure from the emissions baseline will be the most cost-effective because it reduces the pressure for premature retirement of the existing capital stock, and it provides valuable time to develop low-cost, low-carbon emitting substitutes. Others counter that a major flaw in analyses that support this line of reasoning is that they ignore learning-by-doing (LBD).
In this paper, we examine the impact of LBD on the timing and costs of emissions abatement. With regard to timing, we find that including learning-by-doing does not significantly alter the conclusions of previous studies that treated technology cost as exogenous. The analysis supports the earlier conclusion that for a wide range of stabilization ceilings, a gradual transition away from the "no policy" emissions baseline is preferable to one that requires substantial near-term reductions. We find that the major impact of including learning-by-doing is on the costs of emission abatement. Depending upon the sensitivity of costs to cumulative experience, LBD can substantially reduce the overall costs of emissions abatement.
Keywords: Impact, Costs of CO2 Abatement, Learning by Doing
JEL Classification: A00, A1, D61, D72, D78, G00, G28, G38, H1, L51
Suggested Citation: Suggested Citation
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By David Nissen