Boosting Sluggish Climate Policy: Endogenous Substitution, Learning, and Energy Efficiency Improvements

Lucas Bretschger, Matthias Leuthard () and Alena Miftakhova
Additional contact information
Matthias Leuthard: Center of Economic Research, ETH Zurich, Zurichbergstrasse 18, 8092 Zurich, Switzerland
Alena Miftakhova: Center of Economic Research, ETH Zurich, Zurichbergstrasse 18, 8092 Zurich, Switzerland

No 24/391, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: There is widespread concern that climate policy is moving too slowly and that decarbonization of economic development is coming too late for effective climate protection. We analyze three different effects that emerge endogenously during decarbonization and amplify current policies: growing substitutability of dirty inputs with clean inputs, learning and scale effects in new renewables, and efficiency improvements in the application of energy. We employ the CITE simulation model, a computable general equilibrium (CGE) model with endogenous growth dynamics, to represent the macroeconomic framework of climate policy, calibrate the impacts, and obtain quantitative results. We use data for the Swiss economy and find that all three effects significantly accelerate decarbonization and markedly reduce the costs of climate policy, with increasing substitutability having the strongest impact. Targeted policies such as subsidies to clean energy and research and development may amplify these effects and thereby speed up the transition towards a carbon-free economy.

Keywords: CGE modelling; endogenous growth; energy efficiency; learning; elasticity of substitution; innovation; climate policy (search for similar items in EconPapers)
Pages: 46 pages
Date: 2024-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ethz.ch/content/dam/ethz/special-interest/ ... papers/wp-24-391.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not found UA

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eth:wpswif:24-391

Access Statistics for this paper

More papers in CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich Contact information at EDIRC.
Bibliographic data for series maintained by ().