Journal
RESOURCE AND ENERGY ECONOMICS
Volume 25, Issue 1, Pages 35-57Publisher
ELSEVIER
DOI: 10.1016/S0928-7655(02)00020-9
Keywords
CO2 abatement costs; renewable investments; endogenous technology
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This paper analyzes the macro-economic costs and effects on consumption and energy demand of limiting the global average atmospheric temperature increase to 2 degreesC. We use a macro-economic model in which there are two competing energy technologies (carbon and non-carbon, respectively), technological change is represented endogenously, and energy is aggregated through a CES function implying positive demand for the relatively expensive non-carbon technology. Technological change is represented through a learning curve describing decreasing energy production costs as a function of cumulative experience. We find that energy savings constitutes an important mechanism for decreasing abatement costs in the short- and medium-term, while the acquisition of additional learning experience substantially decreases abatement costs in the longer-term. (C) 2002 Elsevier Science B.V. All rights reserved.
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