FEEM working papers "Note di lavoro"
2014.073

Directed Technical Change With Capital-Embodied Technologies: Implications For Climate Policy


Authors: James A. Lennox, Jan Witajewski
JEL n.: O33, O44, Q54, Q55, Q58
JEL: Journal
Published in: Energy Economics, 23 August 2017, ISSN 0140-9883, https://doi.org/10.1016/j.eneco.2017.08.005
Keywords: Climate Change Mitigation, Directed Technical Change, Capital-Embodiment, Investment-Specific Technological Change, Obsolescence

Abstract

We develop a theoretical model of directed technical change in which clean (zero emissions) and dirty (emissions-intensive) technologies are embodied in long-lived capital. We show how obsolescence costs generated by technological embodiment create inertia in a transition to clean growth. Optimal policies involve higher and longer-lasting clean R&D subsidies than when technologies are disembodied. From a low level, emissions taxes are initially increased rapidly, so they are higher in the long run. There is more warming. Introducing spillovers from an exogenous technological frontier representing non-energy-intensive technologies reduces mitigation costs. Optimal taxes and subsidies are lower and there is less warming.

***

Suggested citation: James A. Lennox, Jan Witajewski-Baltvilks, Directed Technical Change with Capital-Embodied Technologies: Implications for Climate Policy, Energy Economics, Available online 23 August 2017, ISSN 0140-9883, https://doi.org/10.1016/j.eneco.2017.08.005.

Download file
Download file
links
Link
Directed Technical Change With Capital-Embodied Technologies: Implications For Climate Policy

FEEM Newsletter & Update

Subscribe to stay connected.

Your data will be processed by FEEM - Eni Enrico Mattei Foundation - Data Controller - to receive the Foundation's Newsletter & Update via e-mail. To send the requested information, the Data Controller uses e-mail sending service providers established in the U.S.A .: for this, your consent to the transfer of your email address to the U.S.A. is required, without which it will not be possible to comply with your request. We invite you to consult the complete information to obtain detailed information to protect your rights.