Importance of technological change and spillovers in long-term climate policy

Shilpa Rao*, Ilkka Keppo, Keywan Riahi

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

38 Citations (Scopus)

Abstract

This paper examines the role of technological change and spillovers within the context of a climate policy in a long-term scenario of the global energy system. We use the energy-systems optimization model MESSAGE considering endogenous learning for various technologies, such that they experience cost reductions as a function of accumulated capacity installations. We find that the existence of technological learning while reducing overall energy system costs becomes particularly important in the context of a long-term climate policy. Diversity in technological portfolios is emphasized and results indicate deployment of a range of energy technologies in reducing emissions. An important finding is that technological learning by itself is not sufficient for climate stabilization and that climate policies are an absolute necessary complimentary element. Under a climate constraint, spillovers across technologies and regions due to learning results in increased upfront investments and hence lower costs of carbon free technologies, thus resulting in technology deployment and emissions reductions, especially in developing countries. We conclude that learning and spillover effects can lead to technologically advanced cost-effective global energy transition pathways. We suggest that coordinated climate stabilization policies can serve as important institutional mechanisms that facilitate the required technological investments, especially in developing countries and thus ensure long-term cost reductions.

Original languageEnglish
Pages (from-to)123-139
Number of pages17
JournalEnergy Journal
Volume27
Issue numberSPEC. ISS. MAR.
Publication statusPublished - 29 Mar 2006
MoE publication typeA1 Journal article-refereed

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