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Optimal CO2-abatement with socio-economic inertia and induced technological change

  • Malte Schwoon
  • Richard S.J. Tol

    ()

    (Economic and Social Research Institute, Dublin)

The impact of induced technological change (ITC) in energy/climate models on the timing of optimal CO2-abatement depends on whether R&D or learning-by-doing (LBD) is the driving force. Bottom-up energy system models employing LBD suggest strong increases in optimal early abatement. In this paper we extend an existing top-down model supporting this view according to the notion that socio-economic inertia interferes with rapid technological change. We derive analytical results concerning the impact of inertia and ITC on optimal initial abatement and show a wide range of numerical simulations to illustrate magnitudes. Inertia now dominates the timing decision on early abatement, such that LBD might even have a negative effect on early abatement and the impact of R&D is limited. However, ITC still reduces costs of stabilizing atmospheric CO2-concentrations considerably.

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File URL: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/WP-FNU-37schwoon_tol.pdf
File Function: First version, 2004
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Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-37.

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Length: 54 pages
Date of creation: Jan 2004
Date of revision: Jan 2004
Publication status: Published, Energy Journal, 27 (4), 25-60
Handle: RePEc:sgc:wpaper:37
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