Climate Policy with Technology Transfers and Permit Trading

In this paper, we analyze technology transfers (TT) and tradable emission rights, which are core issues of the ongoing climate negotiations. Subsidizing TT leads to the adoption of better abatement technologies in the South, thereby reducing the international permit price. This is beneficial for the...

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Bibliographic Details
Published in:Environmental & resource economics 2015-01, Vol.60 (1), p.37-54
Main Authors: Helm, Carsten, Pichler, Stefan
Format: Article
Language:English
Subjects:
Carbon emissions
Climate
Climate change
Climate policy
Deterioration
Developing countries
Economic models
Economic Policy
Economic theory
Economics
Economics and Finance
Emissions
Emissions trading
Endowment
Environmental Economics
Environmental Law/Policy/Ecojustice
Environmental Management
Environmental policy
Incentives
LDCs
Mathematical models
Negotiations
Permits
Receiving
Studies
Subsidies
Subsidies (financial)
Technology transfer
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Summary:In this paper, we analyze technology transfers (TT) and tradable emission rights, which are core issues of the ongoing climate negotiations. Subsidizing TT leads to the adoption of better abatement technologies in the South, thereby reducing the international permit price. This is beneficial for the North as long as it is a permit buyer; hence it chooses to subsidize TT. By contrast, the permit selling South suffers from the lower permit price and its welfare usually deteriorates, despite receiving subsidies. We also consider how TT affects countries’ non-cooperative choices of permit endowments and find that it tends to reduce overall emissions. Finally, a simple numerical simulation model illustrates the results and explores some further comparative statics.
ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-013-9756-6