Transition to Clean Technology

• Main Authors: Acemoglu, Daron (Contributor), Akcigit, Ufuk (Author), Hanley, Douglas (Author), Kerr, William (Author)
• Other Authors: Massachusetts Institute of Technology. Department of Economics (Contributor)
• Format: Article
• Language: English
• Published: University of Chicago Press, 2016-03-22T20:53:56Z.
• Subjects: Article
• Online Access: Get fulltext

We develop an endogenous growth model in which clean and dirty technologies compete in production. Research can be directed to either technology. If dirty technologies are more advanced, the transition to clean technology can be difficult. Carbon taxes and research subsidies may encourage production and innovation in clean technologies, though the transition will typically be slow. We estimate the model using microdata from the US energy sector. We then characterize the optimal policy path that heavily relies on both subsidies and taxes. Finally, we evaluate various alternative policies. Relying only on carbon taxes or delaying intervention has significant welfare costs.
National Science Foundation (U.S.) (NSF grant ITR-0427889)