Climate Policies and Induced Technological Change: Impacts and Timing of Technology Subsidies

University of Oslo Working Paper No. 05/2004

34 Pages Posted: 24 Mar 2004

See all articles by Snorre Kverndokk

Snorre Kverndokk

Ragnar Frisch Centre for Economic Research

Knut Einar Rosendahl

Norwegian University of Life Sciences; Statistics Norway - Research Department

Thomas F. Rutherford

Centre for Energy Policy and Economics

Date Written: March 17, 2004

Abstract

We study the role of technology subsidies in climate policies, using a simple dynamic equilibrium model with learning-by-doing. The optimal subsidy rate of a carbon-free technology is high when the technology is first adopted, but falls significantly over the next decades. However, the efficiency costs of uniform instead of optimal subsidies, may be low if there are introduction or expansion constraints for a new technology. Finally, supporting existing energy technologies only, may lead to technology lock-in, and the impacts of lock-in increase with the learning potential of new technologies as well as the possibilities for early entry and thight carbon constraints.

Keywords: Climate change policies, Computable equilibrium models, Induced technological change, Subsidies, Timing

JEL Classification: D58, H21, O30, Q42

Suggested Citation

Kverndokk, Snorre and Rosendahl, Knut Einar and Rutherford, Thomas F., Climate Policies and Induced Technological Change: Impacts and Timing of Technology Subsidies (March 17, 2004). University of Oslo Working Paper No. 05/2004. Available at SSRN: https://ssrn.com/abstract=519344 or http://dx.doi.org/10.2139/ssrn.519344

Snorre Kverndokk (Contact Author)

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway
+47 22958811 (Phone)
+47 22958825 (Fax)

HOME PAGE: http://www.frisch.uio.no/cv/snorrek_eng.html

Knut Einar Rosendahl

Norwegian University of Life Sciences ( email )

PO Box 5033
NO-1432 Aas
Norway
+47 64966117 (Phone)

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway
+47 21094954 (Phone)
+47 21094963 (Fax)

Thomas F. Rutherford

Centre for Energy Policy and Economics ( email )

ETH-Zentrum
Zurich, CH-8092
United States
+41 (0)44/632 6359 (Phone)
+41 (0)44/632 1622 (Fax)

HOME PAGE: http://www.cepe.ethz.ch/

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