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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Green innovation policies: economics and climate change
Organization Unit
  • David Hémous
  • English
Institution University of Zurich
Series Name UBS Center Public Paper Series
Number 10
Number of Pages 31
Date 2021
Abstract Text Climate change already has a negative impact on the environment and our societies, and this impact will get worse over the course of this century. How much worse? This will depend on our ability to reduce greenhouse gas emissions. Achieving the necessary reduction in emissions, while maintaining (and improving) worldwide living standards can only be achieved through innovation. Fortunately, innovation is not manna from heaven; it is conducted by scientists and firms and it reacts to market and policy incentives. It is therefore up to governments to steer it toward clean technologies. In this public paper, I will review recent economic research on the role of innovation in the design of climate policy. After a quick introduction to the challenges posed by climate change, I will show that current technological trends – though promising – are unlikely to be sufficient to limit warming to 2°C. Can policy then effectively boost green innovation? Recent evidence shows that this is definitely the case. How should global climate policy be designed to leverage this innovation response? What about unilateral policies? Some innovations are “grey”: they permit the replacement of particularly dirty technologies with less dirty but still polluting ones. The shale gas revolution is an example. Can these “grey” innovations backfire?
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