Optimal CO2-abatement with socio-economic inertia and induced technological change

Schwoon, Malte and Tol, Richard S J (2006) Optimal CO2-abatement with socio-economic inertia and induced technological change. Energy Journal, 27 (4). pp. 25-59. ISSN 0195-6574

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Abstract

The impact of induced technological change (ITC) in energy/climate models on the timing of optimal CO2-abatement depends on whether R&D or learning-by-doing (LBD) is the driving force. Bottom-up energy system models employing LBD suggest strong increases in optimal early abatement. In this paper we extend an existing top-down model supporting this view according to the notion that socio-economic inertia interferes with rapid technological change. We derive analytical results concerning the impact of inertia and ITC on optimal initial abatement and show a wide range of numerical simulations to illustrate magnitudes. Inertia now dominates the timing decision on early abatement, such that LBD might even have a negative effect on early abatement and the impact of R&D is limited. However, ITC still reduces costs of stabilizing atmospheric CO2-concentrations considerably. Copyright

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HB Economic theory. Demography
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Depositing User: Richard Tol
Date Deposited: 18 Apr 2012 10:00
Last Modified: 30 Nov 2012 17:12
URI: http://sro.sussex.ac.uk/id/eprint/38330
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