The Role of Technology Policy in Addressing Climate Change

By Adam Jaffe, Director, Motu Economic and Public Policy Research

This article is a condensed version of “Technology Policy and Climate Change,” Climate Change Economics, 3(4) 2012. This version has also appeared in the December 2013 Motu Research Update. If you are interested in staying up to date with Motu's research please sign up to our newsletter.

Like most economists, I believe that the primary policy response to the climate change challenge must be to raise the price associated with the emission of greenhouse gases (GHGs), in order to create the appropriate economic incentives to align economic activities—production, consumption, and investment of all kinds—with the social objective.  Despite the current political controversies surrounding such policies, and the low prices currently imposed on GHGs in several jurisdictions that have implemented emissions trading systems, I believe we will eventually see significant effective prices on GHG emissions in many countries.  In this article, I argue that the implementation of such policies is necessary but not sufficient as a global response to the climate challenge.  Emissions policy should be complemented by “technology policy,” i.e. a set of actions designed to foster the creation, improvement and diffusion of new low-GHG technologies.

Land use models do work (at least sort of)

By Corey Allan and Suzi Kerr

This post first appeared on Agricultural Emissions Dialogue.

Land-use models are used to explore possible futures, anticipate and diagnose problems, and simulate the effects of different policies. ‘All models are wrong but some are useful’ and more carefully developed and rigorously tested models are more useful. If you are interested in how land-use models are and should be used, our recent paper on land-use modelling provides a non-technical overview of the land-use models currently used in New Zealand. 

Good news on carbon pricing: Chile, China and beyond

Post by Suzi Kerr

If global mitigation to achieve a 450 ppm stabilisation target were done efficiently, 70% of the costs would be incurred in developing countries according to modelling by Edmonds et al 2008. This is challenging when developing countries face strong competing priorities and limited resources.  However some developing countries are leading the way, creating the first steps that could allow them to take serious action – and facilitate significant resource transfers to help them do it.

Building global support for emission pricing: A World Bank initiative

By Catherine Leining, Policy Fellow, Motu Economic and Public Policy Research

The World Bank and partners are inviting national and local governments and companies to show support for putting a price on carbon emissions by signing up to a pledge that will be circulated at the United Nations Secretary-General’s Climate Summit on 23 September 2014. To date, over 35 governments and 270 companies have participated. The key section of ‘Putting a Price on Carbon’ reads as follows:

Economic Perspectives on Climate Change: Part 2 Altruism and Conditional Cooperation

Blog Post by Judd Ormsby

In my last post I told a simple story of climate change as a free-rider problem. The view I sketched there looked pretty grim: rational self-interested people won’t achieve cooperation.  The idea is not new: many people interpret Thomas Hobbes’ ‘state of nature’ where the life of man is “solitary, poor, nasty, brutish, and short” as the result of some sort of cooperation problem that the government is required to solve.  Here I want to talk about the evidence that even in stylized settings, where purely self-interested rational people would not cooperate, we actually do observe cooperation (albeit imperfect).