The Effects of Economic and Policy Incentives on Carbon Mitigation Technologies

The ability to estimate the likely effects of potential climate change policies on energy use and greenhouse gas (GHG) emissions requires an improved understanding of the relationship between different policy alternatives and energy-saving and GHG-reducing changes in technology. A particularly important and understudied aspect of this set of issues is the conceptual and empirical modeling of how the various stages of technological change are interrelated, how they unfold over time in response to market forces, and the differential impact of various policies (for example, R&D subsidies, environmental taxes, information programs). We summarize several contributions to this literature and suggest promising areas for continued research on empirical analysis and modeling of induced technological change.