Distorted time preferences and time-to-build in the transition to a low-carbon energy industry

Christoph Heinzel () and Ralph Winkler
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Christoph Heinzel: LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives

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Abstract: We study the welfare-theoretic consequences of diverging social and private time-preference rates and time-to-build for the transition to a low-carbon energy industry. We show that time-to-build, a prevalent characteristic of capital accumulation in the energy sector, amplifies the distortion induced by the split discount rates. Thus, these two characteristics create in a mutually reinforcing way less favorable circumstances for the introduction of new clean energy technologies as compared to the social optimum, even if welfare losses from emissions are internalized. We discuss resulting policy implications with particular emphasis on the energy sector.

Keywords: DISCOUNTING; DISTORTED TIME PREFERENCES; ENERGY INDUSTRY; ENVIRONMENTAL AND TECHNOLOGY POLICY; TECHNOLOGICAL TRANSITION; TIME-TO-BUILD (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (7)

Published in Environmental and Resource Economics, 2011, 49 (2), pp.217-241. ⟨10.1007/s10640-010-9431-0⟩

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Journal Article: Distorted Time Preferences and Time-to-Build in the Transition to a Low-Carbon Energy Industry (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02644272

DOI: 10.1007/s10640-010-9431-0

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