Energy and Climate Policy

Bending the Technological Trajectory

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Technological innovation can lower the cost of achieving environmental objectives, so it is important to understand how environmental policy design and technological innovation are linked. This is particularly true in the area of climate change where the estimated future costs of reducing greenhouse gas emissions are affected greatly by the technological trajectory of the economy. While we suspect that public policy can play an important role in accelerating the development and diffusion of climate change mitigation and adaptation technologies, empirical evidence in this area remains scant. This book presents a series of papers that explore the extent to which technological innovation can lower the cost of achieving climate change mitigation objectives.

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Energy and climate policy: Conclusions and further policy research

In this chapter we present suggested areas for further policy research. Additional work on the identification of the innovation impacts of alternative policies is clearly required. This will necessarily involve modeling the links between policy regimes, knowledge stocks, capital investment and specific environmental outcomes (e.g., emissions) in a comprehensive manner. The development of commensurable indicators of policy regimes across a variety of emitting sources is perhaps the greatest challenge. An important additional challenge for the policy research community relates to the provision of solid empirical evidence which helps countries provide targeted support for “green” innovation without running the risk of locking economies into relatively costly mitigation paths. Technology-neutrality is not always an option, but there is little guidance from the empirical literature on how to target support efficiently. In addition, almost all of the existing work focuses on the effects of policies on technologies that are relatively close-to-market and clearly identifiable as “environmental”. Little work has been done on the role of policy on the invention and adoption of breakthrough technologies and more generic technologies with positive (and potentially even more significant) environmental consequences. A final important avenue for policy research involves the assessment of the value of international research collaboration and technology agreements.

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