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Environmental and technology policies for climate mitigation

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  • Fischer, Carolyn
  • Newell, Richard G.

Abstract

We assess different policies for reducing carbon dioxide emissions and promoting innovation and diffusion of renewable energy. We evaluate the relative performance of policies according to incentives provided for emissions reduction, efficiency, and other outcomes. We also assess how the nature of technological progress through learning and research and development (R&D), and the degree of knowledge spillovers, affects the desirability of different policies. Due to knowledge spillovers, optimal policy involves a portfolio of different instruments targeted at emissions, learning, and R&D. Although the relative cost of individual policies in achieving reductions depends on parameter values and the emissions target, in a numerical application to the U.S. electricity sector, the ranking is roughly as follows: (1) emissions price, (2) emissions performance standard, (3) fossil power tax, (4) renewables share requirement, (5) renewables subsidy, and (6) R&D subsidy. Nonetheless, an optimal portfolio of policies achieves emissions reductions at a significantly lower cost than any single policy.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 55 (2008)
Issue (Month): 2 (March)
Pages: 142-162

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Handle: RePEc:eee:jeeman:v:55:y:2008:i:2:p:142-162

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Web page: http://www.elsevier.com/locate/inca/622870

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  1. La promoción de las renovables como instrumento de mitigación
    by Klaas Würzburg in Economics for Energy on 2012-03-23 08:34:00
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