eeu sweden rff usa | Climate change Policy design
Climate Policy, Uncertainty, and the Role of Technological Innovation
We study how uncertainty about climate change severity affects the relative benefits of early abatement and a portfolio of research and development (R&D) in lowering future abatement costs. Optimal early abatement depends on the curvature of the marginal benefit and marginal abatement cost (MAC) functions and how the uncertain parameter affects marginal benefits.
R&D in a particular technology depends on whether uncertainty increases early abatement; whether investment lowers marginal costs for that technology; whether R&D lowers the slope of that technology's MAC function; and the shape of that technology's MAC function. We illustrate, focusing on the role of backstop technologies.
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Centers
- eeu sweden
- rff usa
Type of publication
- Peer reviewed
Reference
Fischer, C and T Sterner, 2012, "Climate Policy, Uncertainty, and the Role of Technological Innovation", Journal of Public Economic Theory, Vol 14 Iss 2 (pp285–309)Sweden
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