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Induced Technological Change in a Limited Foresight Optimization Model

Author

Listed:
  • Fredrik Hedenus

    (Chalmers University)

  • Christian Azar

    (Chalmers University)

  • Kristian Lindgren

    (Chalmers University)

Abstract

The threat of global warming calls for a major transformation of the energy system the coming century. Modeling technological change is an important factor in energy systems modeling. Technological change may be treated as induced by climate policy or as exogenous. We investigate the importance of induced technological change (ITC) in GET-LFL, an iterative optimization model with limited foresight that includes learning-by-doing. Scenarios for stabilization of atmospheric CO2 concentrations at 400, 450, 500 and 550 ppm are studied. We find that the introduction of ITC reduces the total net present value of the abatement cost over this century by 3-9% compared to a case where technological learning is exogenous. Technology specific polices which force the introduction of fuel cell cars and solar PV in combination with ITC reduce the costs further by 4-7% and lead to significantly different technological solutions in different sectors, primarily in the transport sector.

Suggested Citation

  • Fredrik Hedenus & Christian Azar & Kristian Lindgren, 2005. "Induced Technological Change in a Limited Foresight Optimization Model," Working Papers 2005.125, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2005.125
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    Cited by:

    1. Persson, Tobias A. & Azar, C. & Johansson, D. & Lindgren, K., 2007. "Major oil exporters may profit rather than lose, in a carbon-constrained world," Energy Policy, Elsevier, vol. 35(12), pages 6346-6353, December.

    More about this item

    Keywords

    Energy system model; Limited foresight; Climate policy; Endougenous learning; Technological lock-in;

    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

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