A Review of the Treatment of Technical Change in Energy Economics Models

Reference

Azar, Christian; Dowlatabadi, Hadi. A Review of the Treatment of Technical Change in Energy Economics Models. In Annual Review of Energy and the Environment, edited by Robert Socolow. Palo Alto: Annual Reviews Inc. Volume 24. forthcoming.

Abstract

While climate policy is often talked about as a lever with which to bring about purposive climate-friendly technical innovation and diffusion. Quantitative policy assessments routinely treat technological change as being independent of policy. Stabilizing atmospheric concentrations of CO2 cannot be achieved through marginal changes in the way we supply and use energy. Adopting widely accepted population and economic growth scenarios, substantial change in de-coupling energy services from carbon emissions (»3% per year) is needed for the foreseeable future (»100 years). In this paper, we review evidence of induced technical change in the energy system and how a few recent energy economics models have begun the challenge of making technical change an endogenous feature of their assessments. Finally, we consider the implications of considering endogenous technical change for critical climate policy questions such as the cost of control and the appropriate timing of the emissions mitigation effort.

Paper

A pre-publication version of this paper is available for review below:
Register for a password to view paper
Access the paper in Adobe Acrobat (.pdf) format