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Innovation policy for directing technical change in the power sector

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  • Rob Aalbers

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Victoria Shestalova
  • Viktoria Kocsis

Abstract

This paper discusses policy instruments for redirecting technical change within the electricity sector to mitigate climate change. First, we unravel the mechanism behind directed technical change, explaining why markets may underprovide innovations in expensive renewable technologies in comparison to innovations in energy-efficient fossil-fuel generators. Subsequently, we characterize technical change in electricity generation technologies, stressing the heterogeneity of knowledge spillovers both within and between clean electricity generation technologies. We argue that there exists a rationale for a portfolio approach to innovation in the electricity sector, i.e., optimal innovation policies are neither fully generic nor fully specific; and they need to be adapted, in response to new information learned by the government. The existing innovation literature does not, however, provide a clear-cut answer for designing such a policy. We compare policy instruments and argue that public R&D support to clean technologies, either in the form of subsidies or prizes, seems to be the prime candidate for implementing non-generic innovation policy.

Suggested Citation

  • Rob Aalbers & Victoria Shestalova & Viktoria Kocsis, 2012. "Innovation policy for directing technical change in the power sector," CPB Discussion Paper 223, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:223
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    Cited by:

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    3. Kristoffer Palage & Robert Lundmark & Patrik Söderholm, 2019. "The innovation effects of renewable energy policies and their interaction: the case of solar photovoltaics," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(2), pages 217-254, April.
    4. Joëlle Noailly & Victoria Shestalova, 2013. "Knowledge spillovers from renewable energy technologies, Lessons from patent citations," CPB Discussion Paper 262, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Newbery, David M., 2016. "Towards a green energy economy? The EU Energy Union’s transition to a low-carbon zero subsidy electricity system – Lessons from the UK’s Electricity Market Reform," Applied Energy, Elsevier, vol. 179(C), pages 1321-1330.
    6. Duch-Brown, Néstor & Costa-Campi, María Teresa, 2015. "The diffusion of patented oil and gas technology with environmental uses: A forward patent citation analysis," Energy Policy, Elsevier, vol. 83(C), pages 267-276.
    7. Resende, Marcelo & Strube, Eduardo & Zeidan, Rodrigo, 2014. "Complementarity of innovation policies in Brazilian industry: An econometric study," International Journal of Production Economics, Elsevier, vol. 158(C), pages 9-17.
    8. Joelle Noailly & Victoria Shestalova, 2013. "Knowledge Spillovers from Renewable energy Technologies, Lessons from patent citations," CIES Research Paper series 22-2013, Centre for International Environmental Studies, The Graduate Institute.
    9. Viktória Kocsis & Bert Hof, 2016. "Energy policy evaluation in practice: the case of production subsidies and DEN-B in the Netherlands," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(5), pages 1433-1455, October.
    10. Duch-Brown, Néstor & Costa-Campi, María Teresa, 2015. "The diffusion of patented oil and gas technology with environmental uses: A forward patent citation analysis," Energy Policy, Elsevier, vol. 83(C), pages 267-276.

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    More about this item

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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