Technological Uncertainty and Cost-effectiveness of CO2 Emission Trading Schemes
This paper studies implications of uncertainty about the arrival date of a competitive CO2 backstop technology for the design of cost-effective CO2 emission trading schemes. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO2 emissions associated with energy use, the rate and direction of technical change and the economy. We specify CO2 capture and storage (CCS) as the backstop technology whose competitiveness is anticipated or not. We find that the discounted welfare loss associated with the environmental target is lower if CCS is not anticipated and that CO2 shadow prices are then relatively high in the years before CCS is competitive. By not simply postponing the implementation of an emission reduction strategy until CCS is competitive, one relies more on economy-wide technical change and its welfare-enhancing technology externalities, thus allowing for a higher steady state.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.zew.de/
More information through EDIRC
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.:
- Charles I. Jones & John C. Williams, 1997.
"Measuring the social return to R&D,"
Finance and Economics Discussion Series
1997-12, Board of Governors of the Federal Reserve System (U.S.).
- Mansfield, Edwin, et al, 1977. "Social and Private Rates of Return from Industrial Innovations," The Quarterly Journal of Economics, MIT Press, vol. 91(2), pages 221-40, May.
- Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
- Luis A. Rivera-Batiz & Paul M. Romer, 1990.
"Economic Integration and Endogenous Growth,"
NBER Working Papers
3528, National Bureau of Economic Research, Inc.
- Heal, Geoffrey M., 1993.
"The optimal use of exhaustible resources,"
Handbook of Natural Resource and Energy Economics,
in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880
- Bruno Van Pottelsberghe De La Potterie, 1997.
"Issues in Assessing the Effect of Interindustry R&D Spillovers,"
Economic Systems Research,
Taylor & Francis Journals, vol. 9(4), pages 331-356.
- Bruno Van Pottelsberghe, 1997. "Issues in assessing the effect of interindustry R&D spillovers," ULB Institutional Repository 2013/6235, ULB -- Universite Libre de Bruxelles.
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Valentina Bosetti & David Tomberlin, 2004. "Fondazione Eni Enrico Mattei," Working Papers 2004.102, Fondazione Eni Enrico Mattei.
- Löschel, Andreas & Otto, Vincent M. & Dellink, Rob B., 2005.
"Energy Biased Technical Change: A CGE Analysis,"
ZEW Discussion Papers
05-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Acemoglu, Daron, 2002.
"Directed Technical Change,"
Review of Economic Studies,
Wiley Blackwell, vol. 69(4), pages 781-809, October.
- Scherer, F M, 1982. "Inter-Industry Technology Flows and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 627-34, November.
- Rosendahl, Knut Einar, 2004.
"Cost-effective environmental policy: implications of induced technological change,"
Journal of Environmental Economics and Management,
Elsevier, vol. 48(3), pages 1099-1121, November.
- Knut Einar Rosendahl, 2002. "Cost-effective environmental policy: Implications of induced technological change," Discussion Papers 314, Statistics Norway, Research Department.
- Kamien, Morton I & Schwartz, Nancy L, 1978. "Optimal Exhaustible Resource Depletion with Endogenous Technical Change," Review of Economic Studies, Wiley Blackwell, vol. 45(1), pages 179-96, February.
- Geroski, P. A., 2000.
"Models of technology diffusion,"
Elsevier, vol. 29(4-5), pages 603-625, April.
- Reyer Gerlagh & Bob van der Zwaan, 2006. "Options and Instruments for a Deep Cut in CO2 Emissions: Carbon Dioxide Capture or Renewables, Taxes or Subsidies?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 25-48.
- Lau, Morten I. & Pahlke, Andreas & Rutherford, Thomas F., 2002. "Approximating infinite-horizon models in a complementarity format: A primer in dynamic general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 577-609, April.
- Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
- Beaudry, Paul & van Wincoop, Eric, 1996. "The Intertemporal Elasticity of Substitution: An Exploration Using a US Panel of State Data," Economica, London School of Economics and Political Science, vol. 63(251), pages 495-512, August.
- Otto, Vincent M. & Reilly, John, 2008. "Directed technical change and the adoption of CO2 abatement technology: The case of CO2 capture and storage," Energy Economics, Elsevier, vol. 30(6), pages 2879-2898, November.
- Bosetti, Valentina & Tavoni, Massimo, 2009.
"Uncertain R&D, backstop technology and GHGs stabilization,"
Elsevier, vol. 31(Supplemen), pages S18-S26.
- Valentina Bosetti & Massimo Tavoni, 2007. "Uncertain R&D, Backstop Technology and GHGs Stabilization," Working Papers 2007.6, Fondazione Eni Enrico Mattei.
- Robert E. Hall, 1981.
"Intertemporal Substitution in Consumption,"
NBER Working Papers
0720, National Bureau of Economic Research, Inc.
- McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
- Ferris, Michael C. & Munson, Todd S., 2000. "Complementarity problems in GAMS and the PATH solver," Journal of Economic Dynamics and Control, Elsevier, vol. 24(2), pages 165-188, February.
- Pakes, Ariel & Schankerman, Mark A., 1978.
"The Rate of Obsolescence of Knowledge, Research Gestation Labs, and the Private Rate of Return to Research Resources,"
78-13, C.V. Starr Center for Applied Economics, New York University.
- Ariel Pakes & Mark Schankerman, 1979. "The Rate of Obsolescence Of Knowledge, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Working Papers 0346, National Bureau of Economic Research, Inc.
- Popp, David, 2006. "ENTICE-BR: The effects of backstop technology R&D on climate policy models," Energy Economics, Elsevier, vol. 28(2), pages 188-222, March.
- Dasgupta, Partha & Stiglitz, Joseph, 1981. "Resource Depletion under Technological Uncertainty," Econometrica, Econometric Society, vol. 49(1), pages 85-104, January.
- Bramoulle, Yann & Olson, Lars J., 2005. "Allocation of pollution abatement under learning by doing," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1935-1960, September.
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:7360. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.