Induced Technological Change Under Carbon Taxes

Reyer Gerlagh and Wietze Lise
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Wietze Lise: Institute for Environmental Studies, Faculty of Earth and Life Sciences, Vrije Universiteit, Amsterdam, the Netherlands

No 2003.84, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We develop an economic partial equilibrium model for energy supply and demand with capital and labor as production factors, and endogenous technological change through learning by research and learning by doing. Our model reproduces the learning curve typical for (bottom-up) energy system models. The model also produces an endogenous S-curved transition from fossil fuel energy sources to carbon-free energy sources over the coming two centuries. We use the model to study changes in fossil fuel and carbon-free energy use and carbon dioxide emissions induced by carbon taxes. It is shown that induced technological change accelerates the substitution of carbon-free energy for fossil fuels substantially, and can increase by factor 5 the cumulative emission reductions achieved through a carbon tax over the period 2000-2100.

Keywords: Induced technological change; Environmental taxes; Partial equilibrium; Learning by doing (search for similar items in EconPapers)
JEL-codes: H23 O31 O41 Q42 Q43 (search for similar items in EconPapers)
Date: 2003-09
New Economics Papers: this item is included in nep-ino
References: View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Induced Technological Change under Carbon Taxes (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2003.84

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