Climate Change, Directed Innovation, and Energy Transition: The Long-run Consequences of the Shale Gas Revolution

Daron Acemoglu, David Hemous, Lint Barrage and Philippe Aghion
Additional contact information
Lint Barrage: Brown University
Philippe Aghion: LSE

No 1302, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: The shale gas revolution can potentially reduce CO2 emissions in the short-run in countries which depend heavily on coal. Yet, it may also discourage innovation in green technologies, leading to lower emissions in the long-run. We document that the shale gas revolution was accompanied by a collapse in innovation in green electricity. We build a model of directed technical change where energy is produced using coal, and/or natural gas, and/or a green source of energy. We derive conditions under which, as a result of the above trade-off, the shale gas revolution reduces emissions in the short-run but increases emissions in the long-run. We then use data on electricity production to calibrate the model.

Date: 2019
New Economics Papers: this item is included in nep-ene, nep-env, nep-gro and nep-reg
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Citations: View citations in EconPapers (29)

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Related works:
Working Paper: Climate Change, Directed Innovation, and Energy Transition: The Long-run Consequences of the Shale Gas Revolution (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:1302

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