IDEAS home Printed from https://ideas.repec.org/p/een/camaaa/2019-70.html
   My bibliography  Save this paper

Optimal climate policy with directed technical change, extensive margins and decreasing substitutability between clean and dirty energy

Author

Listed:
  • Anthony Wiskich

Abstract

This paper uses a benchmark climate model with endogenous technical change to consider the effects of three extensions on optimal policy under a clean transition. First, the movement of workers between non-energy and energy sectors lowers the cost of abatement by more than an order of magnitude, favouring taxes over subsidies. Second, the free movement of researchers between non-energy and energy sectors increases the power of policy to avert environmental disaster and leads to a period of intense research in the clean sector above the long-run share, as productivity in the clean sector catches up to the non-energy sector. Third, a decreasing elasticity of substitution between clean and dirty inputs as the share of clean energy rises is considered, reflecting the increasing difficulty of integrating intermittent clean energy supply in electricity. A decreasing elasticity increases the initial optimal tax on dirty energy and therefore lowers the subsidies required to direct technical change towards clean energy.

Suggested Citation

  • Anthony Wiskich, 2019. "Optimal climate policy with directed technical change, extensive margins and decreasing substitutability between clean and dirty energy," CAMA Working Papers 2019-70, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2019-70
    as

    Download full text from publisher

    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2019-12/70_2019_wiskich_0.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Climate change; directed technical change; optimal policy; energy;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2019-70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cama Admin (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.