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Project Mechanisms and Technology Diffusion in Climate Policy

Author

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  • Matthieu Glachant

    () (CERNA i3 - Centre d'économie industrielle i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)

  • Yann Ménière

    () (CERNA i3 - Centre d'économie industrielle i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)

Abstract

The paper deals with the diffusion of GHG mitigation technologies in developing countries. We develop a model where an abatement technology is progressively adopted by firms and we use it to compare the Clean Development Mechanism (CDM) with a standard Cap and Trade scheme (C&T). In the presence of learning spillovers, we show that the CDM yields a higher social welfare than C&T if the first adopter receives CDM credits whereas the followers do not. The analysis leads us to suggest two CDM design improvements: relaxing the additionality constraint for projects which generate significant learning externalities, and allowing collective CDM projects which could internalize learning externalities.

Suggested Citation

  • Matthieu Glachant & Yann Ménière, 2011. "Project Mechanisms and Technology Diffusion in Climate Policy," Post-Print hal-00659062, HAL.
  • Handle: RePEc:hal:journl:hal-00659062
    DOI: 10.1007/s10640-010-9439-5
    Note: View the original document on HAL open archive server: https://hal-mines-paristech.archives-ouvertes.fr/hal-00659062
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    References listed on IDEAS

    as
    1. Dechezleprêtre, Antoine & Glachant, Matthieu & Ménière, Yann, 2008. "The Clean Development Mechanism and the international diffusion of technologies: An empirical study," Energy Policy, Elsevier, vol. 36(4), pages 1273-1283, April.
    2. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 43-63, November.
    3. Montero, Juan-Pablo, 2002. "Permits, Standards, and Technology Innovation," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 23-44, July.
    4. Rolf Golombek & Michael Hoel, 2005. "Climate Policy under Technology Spillovers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 201-227, June.
    5. Fischer, Carolyn & Parry, Ian W. H. & Pizer, William A., 2003. "Instrument choice for environmental protection when technological innovation is endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 523-545, May.
    6. Hoppe, Heidrun C, 2002. "The Timing of New Technology Adoption: Theoretical Models and Empirical Evidence," Manchester School, University of Manchester, vol. 70(1), pages 56-76, January.
    7. Millock, Katrin, 2002. "Technology transfers in the Clean Development Mechanism: an incentives issue," Environment and Development Economics, Cambridge University Press, vol. 7(03), pages 449-466, July.
    8. Blackman, Allen, 1999. "The Economics of Technology Diffusion: Implications for Climate Policy in Developing Countries," Discussion Papers dp-99-42, Resources For the Future.
    9. Requate, Till, 1998. "Incentives to innovate under emission taxes and tradeable permits," European Journal of Political Economy, Elsevier, vol. 14(1), pages 139-165, February.
    10. Greiner, Sandra & Michaelowa, Axel, 2003. "Defining Investment Additionality for CDM projects--practical approaches," Energy Policy, Elsevier, vol. 31(10), pages 1007-1015, August.
    11. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Pollution permits and environmental innovation," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 127-140, October.
    12. Liski, Matti & Tahvonen, Olli, 2004. "Can carbon tax eat OPEC's rents?," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 1-12, January.
    13. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
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    Cited by:

    1. Matthieu Glachant, 2013. "Greening Global Value Chains: Innovation and the International Diffusion of Technologies and Knowledge," OECD Green Growth Papers 2013/5, OECD Publishing.

    More about this item

    Keywords

    Clean development mechanism; Climate policy; Emissions trading; Kyoto Protocol; Technology diffusion;

    JEL classification:

    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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