IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Innovation policy for directing technical change in the power sector

Listed author(s):
  • Aalbers, Rob
  • Shestalova, Victoria
  • Kocsis, Viktória

This paper discusses policy instruments for redirecting technical change within the electricity sector to mitigate climate change. First, we unravel the mechanism behind directed technical change, explaining why markets may underprovide innovations in expensive renewable technologies in comparison to innovations in energy-efficient fossil-fuel generators. Subsequently, we characterize technical change in electricity generation technologies, stressing the heterogeneity of knowledge spillovers both within and between clean electricity generation technologies. We argue that there exists a rationale for a portfolio approach to innovation in the electricity sector, i.e., optimal innovation policies are neither fully generic nor fully specific; and they need to be adapted, in response to new information learned by the government. The existing innovation literature does not, however, provide a clear-cut answer for designing such a policy. We compare policy instruments and argue that public R&D support to clean technologies, either in the form of subsidies or prizes, seems to be the prime candidate for implementing non-generic innovation policy.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0301421513009373
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 63 (2013)
Issue (Month): C ()
Pages: 1240-1250

as
in new window

Handle: RePEc:eee:enepol:v:63:y:2013:i:c:p:1240-1250
DOI: 10.1016/j.enpol.2013.09.013
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

References listed on IDEAS
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.:

as
in new window


  1. Juan-Pablo Montero, 2011. "End of the line: A Note on Environmental Policy and Innovation when Governments cannot Commit," Documentos de Trabajo 394, Instituto de Economia. Pontificia Universidad Católica de Chile..
  2. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, 03.
  3. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
  4. Montero, Juan Pablo, 2011. "A note on environmental policy and innovation when governments cannot commit," Energy Economics, Elsevier, vol. 33(S1), pages 13-19.
  5. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
  6. Bovenberg, A Lans & Smulders, Sjak A, 1996. "Transitional Impacts of Environmental Policy in an Endogenous Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 861-893, November.
  7. Lucas W. Davis, 2012. "Prospects for Nuclear Power," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 49-66, Winter.
  8. Weyant, John P., 2011. "Accelerating the development and diffusion of new energy technologies: Beyond the "valley of death"," Energy Economics, Elsevier, vol. 33(4), pages 674-682, July.
  9. Kahouli-Brahmi, Sondes, 2008. "Technological learning in energy-environment-economy modelling: A survey," Energy Policy, Elsevier, vol. 36(1), pages 138-162, January.
  10. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
  11. Jerry R. Green & Suzanne Scotchmer, 1995. "On the Division of Profit in Sequential Innovation," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 20-33, Spring.
  12. Ek, Kristina & Söderholm, Patrik, 2010. "Technology learning in the presence of public R&D: The case of European wind power," Ecological Economics, Elsevier, vol. 69(12), pages 2356-2362, October.
  13. Daron Acemoglu, 2011. "Diversity and Technological Progress," NBER Chapters,in: The Rate and Direction of Inventive Activity Revisited, pages 319-356 National Bureau of Economic Research, Inc.
  14. Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters,in: Innovation Policy and the Economy, Volume 1, pages 119-150 National Bureau of Economic Research, Inc.
  15. Tooraj Jamasb, 2007. "Technical Change Theory and Learning Curves: Patterns of Progress in Electricity Generation Technologies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 51-72.
  16. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, July.
  17. Unruh, Gregory C., 2002. "Escaping carbon lock-in," Energy Policy, Elsevier, vol. 30(4), pages 317-325, March.
  18. van der Zwaan, B. C. C. & Gerlagh, R. & G. & Klaassen & Schrattenholzer, L., 2002. "Endogenous technological change in climate change modelling," Energy Economics, Elsevier, vol. 24(1), pages 1-19, January.
  19. Sakakibara, Mariko & Branstetter, Lee, 2001. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 77-100, Spring.
  20. Johannes Bollen & Bruno Guay & Stéphanie Jamet & Jan Corfee-Morlot, 2009. "Co-Benefits of Climate Change Mitigation Policies: Literature Review and New Results," OECD Economics Department Working Papers 693, OECD Publishing.
  21. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
  22. Nordhaus, William, 2011. "Designing a friendly space for technological change to slow global warming," Energy Economics, Elsevier, vol. 33(4), pages 665-673, July.
  23. Lovely, Mary & Popp, David, 2011. "Trade, technology, and the environment: Does access to technology promote environmental regulation?," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 16-35, January.
  24. Blanford, Geoffrey J., 2009. "R&D investment strategy for climate change," Energy Economics, Elsevier, vol. 31(Supplemen), pages 27-36.
  25. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
  26. José Moraga-González & Noemi Padrón-Fumero, 2002. "Environmental Policy in a Green Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 419-447, July.
  27. V. Kerry Smith, 2008. "Reflections on the Literature," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(1), pages 130-145, Winter.
  28. Bergquist, Ann-Kristin & Söderholm, Kristina & Kinneryd, Hanna & Lindmark, Magnus & Söderholm, Patrik, 2013. "Command-and-control revisited: Environmental compliance and technological change in Swedish industry 1970–1990," Ecological Economics, Elsevier, vol. 85(C), pages 6-19.
  29. Antoine Dechezleprêtre & Matthieu Glachant, 2014. "Does Foreign Environmental Policy Influence Domestic Innovation? Evidence from the Wind Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(3), pages 391-413, July.
  30. Dekker, Thijs & Vollebergh, Herman R.J. & de Vries, Frans P. & Withagen, Cees A., 2012. "Inciting protocols," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 45-67.
  31. Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
  32. Kahouli, Sondès, 2011. "Re-examining uranium supply and demand: New insights," Energy Policy, Elsevier, vol. 39(1), pages 358-376, January.
  33. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
  34. Marcel Boyer & Jean-Jacques Laffont, 1999. "Toward a Political Theory of the Emergence of Environmental Incentive Regulation," RAND Journal of Economics, The RAND Corporation, vol. 30(1), pages 137-157, Spring.
  35. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Pollution permits and environmental innovation," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 127-140, October.
  36. Lans Bovenberg, A. & Smulders, Sjak, 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Journal of Public Economics, Elsevier, vol. 57(3), pages 369-391, July.
  37. Joëlle Noailly & Roger Smeets, 2013. "Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data," CPB Discussion Paper 237, CPB Netherlands Bureau for Economic Policy Analysis.
  38. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
  39. Pugh, Graham & Clarke, Leon & Marlay, Robert & Kyle, Page & Wise, Marshall & McJeon, Haewon & Chan, Gabriel, 2011. "Energy R&D portfolio analysis based on climate change mitigation," Energy Economics, Elsevier, vol. 33(4), pages 634-643, July.
  40. Herman R. J. Vollebergh & Edwin van der Werf, 2014. "The Role of Standards in Eco-innovation: Lessons for Policymakers," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(2), pages 230-248.
  41. James Bessen & Michael J. Meurer, 2008. "Introduction to Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," Introductory Chapters,in: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk Princeton University Press.
  42. Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
  43. Klaassen, Ger & Miketa, Asami & Larsen, Katarina & Sundqvist, Thomas, 2005. "The impact of R&D on innovation for wind energy in Denmark, Germany and the United Kingdom," Ecological Economics, Elsevier, vol. 54(2-3), pages 227-240, August.
  44. Ryan L. Lampe & Petra Moser, 2012. "Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries under the New Deal," NBER Working Papers 18316, National Bureau of Economic Research, Inc.
  45. Arguedas, Carmen & van Soest, Daan P., 2009. "On reducing the windfall profits in environmental subsidy programs," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 192-205, September.
  46. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2005. "A tale of two market failures: Technology and environmental policy," Ecological Economics, Elsevier, vol. 54(2-3), pages 164-174, August.
  47. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
  48. Newell, Richard & Wilson, Nathan, 2005. "Technology Prizes for Climate Change Mitigation," Discussion Papers dp-05-33, Resources For the Future.
  49. Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
  50. Elisa Lanzi & Ivan Haščič & Nick Johnstone, 2012. "The Determinants of Invention in Electricity Generation Technologies: A Patent Data Analysis," OECD Environment Working Papers 45, OECD Publishing.
  51. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, vol. 54(2-3), pages 175-195, August.
  52. Unruh, Gregory C., 2000. "Understanding carbon lock-in," Energy Policy, Elsevier, vol. 28(12), pages 817-830, October.
  53. Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
  54. Söderholm, Patrik & Sundqvist, Thomas, 2007. "Empirical challenges in the use of learning curves for assessing the economic prospects of renewable energy technologies," Renewable Energy, Elsevier, vol. 32(15), pages 2559-2578.
  55. Golombek Rolf & Greaker Mads & Hoel Michael, 2010. "Carbon Taxes and Innovation without Commitment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-21, April.
  56. Yi Qian, 2007. "Do National Patent Laws Stimulate Domestic Innovation in a Global Patenting Environment? A Cross-Country Analysis of Pharmaceutical Patent Protection, 1978-2002," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 436-453, August.
  57. Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
  58. Joëlle Noailly & Roger Smeets, 2013. "Directing Technical Change from Fossil-Fuel to Renewable Energy Innovation: An Empirical Application Using Firm-Level Patent Data," Working Papers 2013.34, Fondazione Eni Enrico Mattei.
  59. Lindman, Åsa & Söderholm, Patrik, 2012. "Wind power learning rates: A conceptual review and meta-analysis," Energy Economics, Elsevier, vol. 34(3), pages 754-761.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:63:y:2013:i:c:p:1240-1250. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.