Innovation Market Failures and the Design of New Climate Policy Instruments

Sarah C. Armitage, Noël Bakhtian and Adam Jaffe

No 31622, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Moving beyond the combination of adoption subsidies, standards, and (albeit limited) attempts at carbon pricing that largely characterized US climate policy over the past decade, recent climate-related legislation has transformed not only the scale of US climate activities but also the policy mechanisms adopted. Newly scaled policy instruments—including demonstration projects, loan guarantees, green banks, and regional technology hubs—are motivated not only by unpriced carbon externalities but also by innovation market failures. This paper maps the economics literature on innovation market failures and other frictions to the stated goals of these policy instruments, with the goal of focusing discussions about how to implement these policies as effectively as possible. The paper also discusses how program evaluation can help to illuminate which market failures are most relevant in a particular context and which policy instruments are most targeted to them.

JEL-codes: O32 O38 Q54 Q55 Q58 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-ene, nep-env, nep-ino, nep-ppm and nep-tid
Note: EEE
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Published as Innovation Market Failures and the Design of New Climate Policy Instruments , Sarah Armitage, Noël Bakhtian, Adam B. Jaffe. in Environmental and Energy Policy and the Economy, volume 5 , Kotchen, Deryugina, and Wolfram. 2024

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Journal Article: Innovation Market Failures and the Design of New Climate Policy Instruments (2024)
Chapter: Innovation Market Failures and the Design of New Climate Policy Instruments (2023)
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