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The effect of carbon pricing on technological change for full energy decarbonization: A review of empirical exâpost evidence
In order to achieve the temperature goals of the Paris Agreement, the world must reach netâzero carbon emissions around midâcentury, which calls for an entirely new energy system. Carbon pricing, in the shape of taxes or emissions trading schemes, is often seen as the main, or only, necessary climate policy instrument, based on theoretical expectations that this would promote innovation and diffusion of the new technologies necessary for full decarbonization. Here, we review the empirical knowledge available in academic exâpost analyses of the effectiveness of existing, comparatively highâprice carbon pricing schemes in the European Union, New Zealand, British Columbia, and the Nordic countries. Some articles find shortâterm operational effects, especially fuel switching in existing assets, but no article finds mentionable effects on technological change. Critically, all articles examining the effects on zeroâcarbon investment found that existing carbon pricing scheme have had no effect at all. We conclude that the effectiveness of carbon pricing in stimulating innovation and zeroâcarbon investment remains a theoretical argument. So far, there is no empirical evidence of its effectiveness in promoting the technological change necessary for full decarbonization.
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Climate Economics > Economics of MitigationISSN:1757-7780ISSN:1757-779