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

Malte Schwoon () and Richard S.J. Tol ()

No FNU-37, Working Papers from Research unit Sustainability and Global Change, Hamburg University

Abstract: 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.

Keywords: climate policy; technological change; inertia (search for similar items in EconPapers)
JEL-codes: O32 Q40 Q54 (search for similar items in EconPapers)
Date: 2004-01, Revised 2004-01
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Published, Energy Journal, 27 (4), 25-60

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http://www.fnu.zmaw.de/fileadmin/fnu-files/publica ... NU-37schwoon_tol.pdf First version, 2004 (application/pdf)

Related works:
Journal Article: Optimal CO2-abatement with Socio-economic Inertia and Induced Technological Change (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:sgc:wpaper:37

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