Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192750 
Year of Publication: 
2014
Series/Report no.: 
Discussion Papers No. 768
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Publicly announced GHG mitigation targets and emissions pricing strategies by individual governments may suffer from inherent commitment problems. When emission prices are perceived as short-lived, socially cost-effective upfront investment in climate technologies may be hampered. This paper compares the social abatement cost of a uniform GHG pricing system with two policy options for overcoming such regulatory uncertainty: one with a state guarantee scheme whereby the regulatory risk is borne by the government and one which combines emissions pricing with subsidies for upfront climate technology investments. A technology-rich CGE model is applied that accounts for abatement both within and beyond existing technologies. Our findings suggest a tripling of abatement costs if domestic climate policies fail to stimulate investment in new technological solutions. Since the cost of funding investment subsidies is found to be small, the subsidy scheme performs almost as well as the guarantee scheme.
Subjects: 
Abatement costs
Climate technologies
Credible commitment
Computable general equilibrium model
Technological change
Technological diffusion
Hybrid modelling
Document Type: 
Working Paper

Files in This Item:
File
Size
5.36 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.