Green Road is Open: Economic Pathway with a Carbon Price Escalator

Lucas Bretschger

No 22/375, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: The paper develops the concept of "Economic Pathways" (EPs), which characterize theory-based scenarios for an economy that strives to achieve decarbonization by mid-century. The theoretical framework derives closed-from 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 important causalities between the economy and the environment to be included and significantly narrow 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. Subsidies to the research sector support income development significantly. 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 (search for similar items in EconPapers)
JEL-codes: O41 O47 Q43 Q56 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2022-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Green Road is open: Economic Pathway with a carbon price escalator (2024)
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