Energy system change and external effects in climate change mitigation
AbstractThrough a dynamic model of energy system change the paper examines the role of innovation in bringing about a low carbon energy system. The processes of innovation and technological substitution are cumulative, dynamic, and highly non-linear processes such that how the energy system evolves in the long term is extraordinarily sensitive to the strength and duration of the initial policies. It is possible, under some policy assumptions, that energy systems would continue to depend on fossil fuels for so long as fossil fuels remain abundant and the least cost resource; and under other assumptions, after allowing for the unavoidable lags associated with investment and the building up of a new capital stock, that fossil fuels would become almost wholly displaced by the non-carbon alternatives. The implication is that the external benefits of innovation, which include the creation of options and the reduction of costs arising directly from innovation itself, and the reduction of environmental damage, are far greater, perhaps by orders of magnitude, than the traditional cost benefit models used for the analysis of climate change mitigation. The analysis suggests why a focus on discovery and innovation offers a promising way forward for national and international policies on climate change.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Environment and Development Economics.
Volume (Year): 12 (2007)
Issue (Month): 03 (June)
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- van Kooten, G. Cornelis & Timilsina, Govinda R., 2009. "Wind power development : economics and policies," Policy Research Working Paper Series 4868, The World Bank.
- Dagoumas, [alpha].S. & Barker, T.S., 2010. "Pathways to a low-carbon economy for the UK with the macro-econometric E3MG model," Energy Policy, Elsevier, vol. 38(6), pages 3067-3077, June.
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