The effects of carbon prices and taxes on induced innovation
Technological change will be key to succeeding in the battle against climate change since current technologies are not sufficient to achieve the necessary greenhouse gas (GHG) reductions. This project tries to answer the following research questions: Can technological change be directed through the use of carbon taxes and emission pricing to "green" technologies? Are these "market-based" instruments more or less effective than "command-and-control" policy instruments (e.g. renewable quotas, subsidies, regulation) to direct technological change? More generally, which instruments are most effective to increase "green" innovation in different sectors of the economy, and when?
Our main interests are:
Do carbon policies direct technological change towards green technologies
and if so, when is carbon pricing more efficient than command-and-control measures?
Are there heterogeneous effects across sectors
and if so, what determines this heterogeneity (e.g. closeness to the market)?