Strategic Investment in Climate Friendly Technologies: The Impact of Global Emissions Trading

Our point of departure is that a group of industrialized countries invest in research and development (R&D) of greenhouse gas (GHG) abatement technologies. R&D investments influence the future GHG abatement choices of both industrialized and developing countries. We distinguish between inves...

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Bibliographic Details
Published in:Environmental & resource economics 2014-09, Vol.59 (1), p.65-85
Main Authors: Greaker, Mads, Hagem, Cathrine
Format: Article
Language:English
Subjects:
Climate change
Cooperation
Costs
Deterrence
Developing countries
Economic Policy
Economics
Economics and Finance
Emission standards
Emissions trading
Environmental Economics
Environmental Law/Policy/Ecojustice
Environmental Management
Environmental policy
Equilibrium
Greenhouse gases
Incentives
Industrialized countries
Investment
Kyoto Protocol
LDCs
R&D
Research & development
Research and development
Studies
Technology
Technology adoption
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Summary:Our point of departure is that a group of industrialized countries invest in research and development (R&D) of greenhouse gas (GHG) abatement technologies. R&D investments influence the future GHG abatement choices of both industrialized and developing countries. We distinguish between investments that reduce industrialized countries’ abatement costs and investments that reduce developing countries’ abatement costs. Unlike earlier contributions, we include global trading in emission permits. This changes the nature of the game. With global permit trading, industrialized countries should in many cases invest strategically in technologies that only reduce abatement costs at home. This comes in addition to investments abroad. Second, we show that R&D investments always decrease total emissions. Finally, we find that the developing region receiving investments always benefits.
ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-013-9718-z