Green Road is open: Economic Pathway with a carbon price escalator

Lucas Bretschger

Journal of Environmental Economics and Management, 2024, vol. 127, issue C

Abstract: The paper develops the concept of “Economic Pathways” (EPs), which characterizes theory-based scenarios for an economy that strives for decarbonization by the middle of the century. The theoretical framework derives closed-form analytical solutions for consumption, innovation, emissions, and population. The EPs differ in the stringency of assumed policies and associated income and emission development. Unlike the well-known “Shared Socioeconomic Pathways”, they allow the inclusion of important causalities between the economy and the environment and thereby considerably narrow down the scope of likely future developments. The quantitative part serves to illustrate the long-term consequences of climate policy. I show that deep decarbonization only moderately delays economic development, but requires increasing escalation of the carbon price. The paper argues that the adoption of more stringent climate policies becomes more likely as the phase-out of fossil fuels increases. The “Green Road” is not only feasible but also attractive and realistic.

Keywords: Climate policies; Consumption growth; Population growth; Endogenous innovation; Economic Pathways; Shared Socioeconomic Pathways (search for similar items in EconPapers)
JEL-codes: O41 O47 Q43 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Green Road is Open: Economic Pathway with a Carbon Price Escalator (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:127:y:2024:i:c:s0095069624001074

DOI: 10.1016/j.jeem.2024.103033

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