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Subsidizing the Adoption of Energy-Saving Technologies: Analyzing the Impact of Uncertainty, Learning and Maturation

Author

Listed:
  • Henri L.F. de Groot

    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

  • Peter Mulder

    (Institute for Environmental Studies, Vrije Universiteit Amsterdam)

  • Daan P. van Soest

    (Tilburg University)

Abstract

As part of the Kyoto Protocol, many countries have committed themselves tosubstantially reduce the emission of greenhouse gases within a politically imposed timeconstraint. Investment subsidies can be an important instrument to stimulate the adoption ofenergy-saving technologies to achieve emission reduction targets. This paper addresses theimpact of adoption subsidies on the amount of energy savings, taking into account endogeneityand uncertainty of technological progress. Neglecting these two characteristics oftechnological progress tends to result in overestimation of the short-run effectiveness ofinvestment subsidies, whereas the effects on long-run effectiveness are ambiguous.

Suggested Citation

  • Henri L.F. de Groot & Peter Mulder & Daan P. van Soest, 2004. "Subsidizing the Adoption of Energy-Saving Technologies: Analyzing the Impact of Uncertainty, Learning and Maturation," Tinbergen Institute Discussion Papers 03-019/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030019
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    Cited by:

    1. Théophile T. Azomahou & Raouf Boucekkine & Phu Nguyen-Van, 2012. "Vintage capital and the diffusion of clean technologies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 8(3), pages 277-300, September.
    2. Vijayanarasimha Hindupur Pakka & Richard Mark Rylatt, 2016. "Design and Analysis of Electrical Distribution Networks and Balancing Markets in the UK: A New Framework with Applications," Energies, MDPI, vol. 9(2), pages 1-20, February.

    More about this item

    Keywords

    energy efficiency; investing under uncertainty; subsidies; learning; investment timing.;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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