Charging the Transition: Directed Technical Change with Enabling Technologies

Maria Alsina-Pujols and Isabel Hovdahl

No 12664, CESifo Working Paper Series from CESifo

Abstract: We study how complementarity reshapes innovation incentives and the effectiveness of policies aimed at directing technological transitions. By incorporating energy storage into a macro-climate model, we show that when this enabling technology lags behind renewables, advances in renewable technology can paradoxically reduce incentives for clean innovation. We analytically characterize this novel indirect path dependency effect, which provides a new explanation for the post-2010 collapse in renewable patenting. Calibrated to the U.S. economy, we find that omitting storage overestimates climate policy effectiveness, optimal policy should prioritize storage over renewables, and halving the storage productivity gap increases annual welfare by 1%.

Keywords: directed technical change; energy storage; climate policy; path dependency; energy transition (search for similar items in EconPapers)
JEL-codes: O33 O44 Q43 Q48 (search for similar items in EconPapers)
Date: 2026
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