TY - JOUR
T1 - Innovation-Led Transitions in Energy Supply
AU - Lemoine, Derek
N1 - Publisher Copyright:
© (2024), (American Economic Association). All Rights Reserved.
PY - 2024
Y1 - 2024
N2 - Generalizing models of directed technical change, I show that com-plementarities between innovations and factors of production (here, energy resources) can drive transitions away from a dominant sector. In a calibrated numerical implementation, the economy gradually tran-sitions energy supply from coal to gas and then to renewable energy, even in the absence of policy. The welfare-maximizing tax on carbon emissions is J-shaped, immediately redirects most research to renew-ables, and rapidly transitions energy supply directly to renewables. The emission tax is twice as valuable as either the welfare-maximizing research subsidy or the welfare-maximizing mandate to use renewable resources.
AB - Generalizing models of directed technical change, I show that com-plementarities between innovations and factors of production (here, energy resources) can drive transitions away from a dominant sector. In a calibrated numerical implementation, the economy gradually tran-sitions energy supply from coal to gas and then to renewable energy, even in the absence of policy. The welfare-maximizing tax on carbon emissions is J-shaped, immediately redirects most research to renew-ables, and rapidly transitions energy supply directly to renewables. The emission tax is twice as valuable as either the welfare-maximizing research subsidy or the welfare-maximizing mandate to use renewable resources.
UR - http://www.scopus.com/inward/record.url?scp=85184782905&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85184782905&partnerID=8YFLogxK
U2 - 10.1257/mac.20200369
DO - 10.1257/mac.20200369
M3 - Article
AN - SCOPUS:85184782905
SN - 1945-7707
VL - 16
SP - 29
EP - 65
JO - American Economic Journal: Macroeconomics
JF - American Economic Journal: Macroeconomics
IS - 1
ER -