Abatement, R&D and growth with a pollution ceiling

Kollenbach, Gilbert ORCID: https://orcid.org/0000-0002-1168-3316 (2015) Abatement, R&D and growth with a pollution ceiling. Journal of Economic Dynamics and Control, 54. pp. 1-16. ISSN 0165-1889

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Abstract

The consequences of the 2 °C climate target and the implicitly imposed ceiling on CO2 have been analyzed in several studies. We use an endogenous growth model with a ceiling and an abatement option to study the effect of the ceiling on the allocation of limited funds for R&D, abatement and capital accumulation. It is found that the advantagenousness of abatement rises with the cost advantage of fossil fuel versus backstop. If the cost advantage is sufficiently large at some point in time it outweighs the costs of abatement and the gains of R&D and capital accumulation. The reallocation of production towards abatement may cause an increase or decrease in long-run consumption. In the latter case, abatement allows an intertemporal consumption trade-off which may even justify the disregard of everlasting growth. In case of stock dependent fossil fuel costs, an abatement induced speed-up of technology development may cause an increase in fossil fuel stock left in situ.

Item Type:	Article
Uncontrolled Keywords:	sdg 13 - climate action ,/dk/atira/pure/sustainabledevelopmentgoals/climate_action
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict
Depositing User:	LivePure Connector
Date Deposited:	28 Oct 2024 11:30
Last Modified:	03 Nov 2024 07:30
URI:	https://ueaeprints.uea.ac.uk/id/eprint/97231
DOI:	10.1016/j.jedc.2015.02.014

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