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Environmental and Technology Policies for Climate Mitigation

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Author Info
Fischer, Carolyn () (Resources for the Future)
Newell, Richard () (Resources for the Future)

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Abstract

We assess different policies for reducing carbon dioxide emissions and promoting the 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 R&D, and the degree of knowledge spillovers, affect 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 significantly lower cost than any single policy.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-04-05.

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Date of creation: 28 Apr 2004
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Related research
Keywords: environment; technology; externality; policy; climate change; renewable energy;

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Find related papers by JEL classification:
Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply (the Commons)
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lawrence H. Goulder & William A. Pizer, 2006. "The Economics of Climate Change," NBER Working Papers 11923, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Burtraw, Dallas & Pizer, William & Harrington, Winston & Sanchirico, James & Newell, Richard, 2005. "Modeling Economywide versus Sectoral Climate Policies Using Combined Aggregate-Sectoral Models," Discussion Papers dp-05-08, Resources For the Future. [Downloadable!]
  3. Legge, Thomas & Scott, Sue, 2009. "Policy Options to Reduce Ireland's Greenhouse Gas Emissions," Research Series, Economic and Social Research Institute (ESRI), number RS009. [Downloadable!]
  4. Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W.H. Parry & William A. Pizer, 2009. "Designing Climate Mitigation Policy," NBER Working Papers 15022, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Thomas Eichner & Rüdiger Pethig, 2009. "Efficient management of insecure fossil fuel imports through taxing (!) domestic green energy?," Volkswirtschaftliche Diskussionsbeitraege 138-09, Universität Siegen, Fachbereich Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht. [Downloadable!]
  6. Tom-Reiel Heggedal and Karl Jacobsen, 2008. "Timing of innovation policies when carbon emissions are restricted: an applied general equilibrium analysis," Discussion Papers 536, Research Department of Statistics Norway. [Downloadable!]
  7. Legge, Thomas & Scott, Susan, 2009. "Policy Options to Reduce Ireland's GHG Emissions [Instrument choice: the pros and cons of alternative policy instruments]," Papers WP284, Economic and Social Research Institute (ESRI). [Downloadable!]
  8. William A. Pizer & David Popp, 2007. "Endogenizing Technological Change: Matching Empirical Evidence to Modeling Needs," NBER Working Papers 13053, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Torstein Bye and Annegrete Bruvoll, 2008. "Multiple instruments to change energy behaviour: The emperor’s new clothes?," Discussion Papers 549, Research Department of Statistics Norway. [Downloadable!]
  10. Pizer, William A., 2007. "The Evolution of a Global Climate Change Agreement," Discussion Papers dp-07-03, Resources For the Future. [Downloadable!]
    Other versions:
  11. Parry, Ian W.H. & Goulder, Lawrence H., 2008. "Instrument Choice in Environmental Policy," Discussion Papers dp-08-07, Resources For the Future. [Downloadable!]
    Other versions:
  12. Kruger, Joseph & Oates, Wallace E. & Pizer, William A., 2007. "Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy," Discussion Papers dp-07-02, Resources For the Future. [Downloadable!]
  13. Ben Youssef, Slim & Zaccour, Georges, 2009. "Absorptive Capacity, R&D Spillovers, Emissions Taxes and R&D Subsidies," MPRA Paper 16984, University Library of Munich, Germany, revised Aug 2009. [Downloadable!]
  14. Dirk T.G. Rübbelke & Vivekananda Mukherjee & Tilak Sanyal, 2008. "Technology Transfer in the Non-traded Sector as a Means to Combat Global Warming," Working Papers 2008.78, Fondazione Eni Enrico Mattei. [Downloadable!]
  15. Fischer, Carolyn, 2006. "How Can Renewable Portfolio Standards Lower Electricity Prices?," Discussion Papers dp-06-20, Resources For the Future. [Downloadable!]
  16. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2004. "A Tale of Two Market Failures: Technology and Environmental Policy," Discussion Papers dp-04-38, Resources For the Future. [Downloadable!]
    Other versions:
  17. Aldy, Joseph E. & Ley, Eduardo & Parry, Ian W.H., 2008. "A Tax-Based Approach to Slowing Global Climate Change," Discussion Papers dp-08-26, Resources For the Future. [Downloadable!]
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