IDEAS home Printed from https://ideas.repec.org/p/diw/diwwpp/dp530.html
   My bibliography  Save this paper

Impact Assessment of Emissions Stabilization Scenarios with and without Induced Technological Change

Author

Listed:
  • Claudia Kemfert
  • Truong P. Truong

Abstract

The main aim of this paper is to investigate quantitatively the economic impacts of emissions stabilization scenarios with and without the inclusion of induced technological change (ITC). Improved technological innovations are triggered by increased R&D expenditures that advance energy efficiencies. Model results show that induced technological changes due to increased investment in R&D reduce compliance costs. Although R&D expenditures compete with other investment expenditures, we find that increased R&D expenditures improve energy efficiency which substantially lowers abatement costs. Without the inclusion of induced technological change, emissions targets are primarily reached by declines in production, resulting in overall welfare reductions. With the inclusion of induced technological changes, emissions mitigations can result in fewer production and GDP drawbacks.

Suggested Citation

  • Claudia Kemfert & Truong P. Truong, 2005. "Impact Assessment of Emissions Stabilization Scenarios with and without Induced Technological Change," Discussion Papers of DIW Berlin 530, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp530
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.43861.de/dp530.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Claudia Kemfert, 2005. "Global Climate Protection: Immediate Action Will Avert High Costs," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 1(12), pages 135-141.
    2. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
    3. Carraro, Carlo & Gerlagh, Reyer & Zwaan, Bob van der, 2003. "Endogenous technical change in environmental macroeconomics," Resource and Energy Economics, Elsevier, vol. 25(1), pages 1-10, February.
    4. Kemfert, Claudia, 2005. "Induced technological change in a multi-regional, multi-sectoral, integrated assessment model (WIAGEM): Impact assessment of climate policy strategies," Ecological Economics, Elsevier, vol. 54(2-3), pages 293-305, August.
    5. Ottmar Edenhofer & Kai Lessmann & Claudia Kemfert & Michael Grubb & Jonathan Köhler, 2006. "Induced Technological Change: Exploring its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the innovation Modeling Comparison Project," The Energy Journal, , vol. 27(1_suppl), pages 57-108, January.
    6. Sue Wing, Ian, 2006. "Representing induced technological change in models for climate policy analysis," Energy Economics, Elsevier, vol. 28(5-6), pages 539-562, November.
    7. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    8. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    9. Dowlatabadi, Hadi, 1998. "Sensitivity of climate change mitigation estimates to assumptions about technical change," Energy Economics, Elsevier, vol. 20(5-6), pages 473-493, December.
    10. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    11. Gerlagh, Reyer & van der Zwaan, Bob, 2003. "Gross world product and consumption in a global warming model with endogenous technological change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 35-57, February.
    12. Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
    13. Buonanno, Paolo & Carraro, Carlo & Galeotti, Marzio, 2003. "Endogenous induced technical change and the costs of Kyoto," Resource and Energy Economics, Elsevier, vol. 25(1), pages 11-34, February.
    14. Jaffe, Adam B., 2000. "The U.S. patent system in transition: policy innovation and the innovation process," Research Policy, Elsevier, vol. 29(4-5), pages 531-557, April.
    15. repec:bla:jindec:v:46:y:1998:i:2:p:235-56 is not listed on IDEAS
    16. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    17. Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
    18. Popp, David C., 2001. "The effect of new technology on energy consumption," Resource and Energy Economics, Elsevier, vol. 23(3), pages 215-239, July.
    19. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jensen, Henning Tarp & Jensen, Hans Grinsted & Gylling, Morten, 2009. "Adoption of GM Food Crop Varieties in the European Union," Conference papers 331886, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Li, Bo & Han, Yukai & Wang, Chensheng & Sun, Wei, 2022. "Did civilized city policy improve energy efficiency of resource-based cities? Prefecture-level evidence from China," Energy Policy, Elsevier, vol. 167(C).
    3. Caetano, Marco Antonio Leonel & Gherardi, Douglas Francisco Marcolino & Yoneyama, Takashi, 2008. "Optimal resource management control for CO2 emission and reduction of the greenhouse effect," Ecological Modelling, Elsevier, vol. 213(1), pages 119-126.
    4. Peterson, Everett B. & Schleich, Joachim & Duscha, Vicki, 2011. "Environmental and economic effects of the Copenhagen pledges and more ambitious emission reduction targets," Energy Policy, Elsevier, vol. 39(6), pages 3697-3708, June.
    5. Haiqian Ke & Wenyi Yang & Xiaoyang Liu & Fei Fan, 2020. "Does Innovation Efficiency Suppress the Ecological Footprint? Empirical Evidence from 280 Chinese Cities," IJERPH, MDPI, vol. 17(18), pages 1-23, September.
    6. Peterson, Everett B. & Schleich, Joachim & Duscha, Vicki, 2012. "Sectoral Targets as a Means to Reduce Global Carbon Emissions," Conference papers 332200, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Ashina, Shuichi & Fujino, Junichi & Masui, Toshihiko & Ehara, Tomoki & Hibino, Go, 2012. "A roadmap towards a low-carbon society in Japan using backcasting methodology: Feasible pathways for achieving an 80% reduction in CO2 emissions by 2050," Energy Policy, Elsevier, vol. 41(C), pages 584-598.
    8. Okay, Nesrin & Akman, Ugur, 2010. "Analysis of ESCO activities using country indicators," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2760-2771, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kemfert, Claudia, 2005. "Induced technological change in a multi-regional, multi-sectoral, integrated assessment model (WIAGEM): Impact assessment of climate policy strategies," Ecological Economics, Elsevier, vol. 54(2-3), pages 293-305, August.
    2. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    3. Gillingham, Kenneth & Newell, Richard G. & Pizer, William A., 2008. "Modeling endogenous technological change for climate policy analysis," Energy Economics, Elsevier, vol. 30(6), pages 2734-2753, November.
    4. Sue Wing, Ian, 2006. "Representing induced technological change in models for climate policy analysis," Energy Economics, Elsevier, vol. 28(5-6), pages 539-562, November.
    5. De Cian, Enrica, 2006. "International Technology Spillovers in Climate-Economy Models: Two Possible Approaches," Climate Change Modelling and Policy Working Papers 12040, Fondazione Eni Enrico Mattei (FEEM).
    6. Peterson, Sonja, 2005. "Technischer Fortschritt im DART-Modell," Open Access Publications from Kiel Institute for the World Economy 3806, Kiel Institute for the World Economy (IfW Kiel).
    7. Pizer, William A. & Popp, David, 2008. "Endogenizing technological change: Matching empirical evidence to modeling needs," Energy Economics, Elsevier, vol. 30(6), pages 2754-2770, November.
    8. Mort Webster & Karen Fisher-Vanden & David Popp & Nidhi Santen, 2017. "Should We Give Up after Solyndra? Optimal Technology R&D Portfolios under Uncertainty," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 123-151.
    9. Gerlagh, Reyer, 2008. "A climate-change policy induced shift from innovations in carbon-energy production to carbon-energy savings," Energy Economics, Elsevier, vol. 30(2), pages 425-448, March.
    10. Valentina Bosetti & Carlo Carraro & Marzio Galeotti, 2006. "Stabilisation Targets, Technical Change and the Macroeconomic Costs of Climate Change Control," Working Papers 2006.2, Fondazione Eni Enrico Mattei.
    11. Wei Jin, 2012. "Can Technological Innovation Help China Take on Its Climate Responsibility? A Computable General Equilibrium Analysis," CAMA Working Papers 2012-51, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    12. Baker, Erin & Clarke, Leon & Shittu, Ekundayo, 2008. "Technical change and the marginal cost of abatement," Energy Economics, Elsevier, vol. 30(6), pages 2799-2816, November.
    13. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516, Elsevier.
    14. Popp, David, 2005. "Lessons from patents: Using patents to measure technological change in environmental models," Ecological Economics, Elsevier, vol. 54(2-3), pages 209-226, August.
    15. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
    16. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2000. "Technological Change and the Environment," Working Paper Series rwp00-002, Harvard University, John F. Kennedy School of Government.
    17. Bibas, Ruben & Méjean, Aurélie & Hamdi-Cherif, Meriem, 2015. "Energy efficiency policies and the timing of action: An assessment of climate mitigation costs," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 137-152.
    18. Naqvi, Asjad & Stockhammer, Engelbert, 2018. "Directed Technological Change in a Post-Keynesian Ecological Macromodel," Ecological Economics, Elsevier, vol. 154(C), pages 168-188.
    19. Bretschger, Lucas, 2005. "Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity?," Ecological Economics, Elsevier, vol. 54(2-3), pages 148-163, August.
    20. David Popp, 2004. "ENTICE-BR: The Effects of Backstop Technology R&D on Climate Policy Models," NBER Working Papers 10285, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Impact assessment of climate policy; Technological change;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp530. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.