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The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model

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  • Bosetti, Valentina
  • Carraro, Carlo
  • Duval, Romain
  • Sgobbi, Alessandra
  • Tavoni, Massimo

Abstract

This paper uses the WITCH model, a computable general equilibrium model with endogenous technological change, to explore the impact of various climate policies on energy technology choices and the costs of stabilising greenhouse gas concentrations. Current and future expected carbon prices appear to have powerful effects on R&D spending and clean technology diffusion. Their impact on stabilisation costs depends on the nature of R&D: R&D targeted at incremental energy efficiency improvements has only limited effects, but R&D focused on the emergence of major new low-carbon technologies could lower costs drastically if successful – especially in the non-electricity sector, where such low-carbon options are scarce today. With emissions coming from multiple sources, keeping a wide range of options available matters for stabilisation costs more than improving specific technologies. Due to international knowledge spillovers, stabilisation costs could be further reduced through a complementary, global R&D policy. However, a strong price signal is always required.

Suggested Citation

  • Bosetti, Valentina & Carraro, Carlo & Duval, Romain & Sgobbi, Alessandra & Tavoni, Massimo, 2009. "The Role of R&D and Technology Diffusion in Climate Change Mitigation: New Perspectives Using the Witch Model," Sustainable Development Papers 50363, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemdp:50363
    DOI: 10.22004/ag.econ.50363
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    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • H0 - Public Economics - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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