Technological Uncertainty and Cost-effectiveness of CO2 Emission Trading Schemes

This paper studies implications of uncertainty about the arrival date of a competitive CO2 backstop technology for the design of cost-effective CO2 emission trading schemes. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO2 emissions associated with energy use, the rate and direction of technical change and the economy. We specify CO2 capture and storage (CCS) as the backstop technology whose competitiveness is anticipated or not. We find that the discounted welfare loss associated with the environmental target is lower if CCS is not anticipated and that CO2 shadow prices are then relatively high in the years before CCS is competitive. By not simply postponing the implementation of an emission reduction strategy until CCS is competitive, one relies more on economy-wide technical change and its welfare-enhancing technology externalities, thus allowing for a higher steady state. -- Dieses Papier untersucht die Implikationen von Unsicherheit bezüglich der Verfügbarkeit einer kompetitiven Technologie zur Kohlenstoffabscheidung und ?speicherung auf die Ausgestaltung kosteneffektiver CO2 Emissionshandelssysteme. Zu diesem Zweck wird ein dynamisches rechenbares allgemeines Gleichgewichtsmodell entwickelt, welches den empirischen Zusammenhang zwischen CO2 Emissionen, Rate und Richtung des technischen Wandels und wirtschaftlichen Aktivitäten berücksichtigt. Kohlenstoffabscheidung und ?speicherung wird als sogenannte Backstop-Technologie modelliert, deren Wirtschaftlichkeit antizipiert wird oder eben nicht. Die Simulationsergebnisse zeigen, dass die diskontierten Wohlfahrtsverluste der Klimapolitik niedriger sind, wenn die Technologie zur Kohlenstoffabscheidung und ?speicherung nicht antizipiert wird. In diesem Fall sind die Preise für CO2 Emissionszertifikate vor der unerwarteten Einführung der Backstop-Technologie relativ hoch. Es wird nicht einfach auf die Wirtschaftlichkeit der Kohlenstoffabscheidung und ? speicherung gewartet. Vielmehr wird ohne die Berücksichtigung von Kohlenstoffabscheidung und ? speicherung ein strikterer Politikpfad zur Erreichung der klimapolitischen Ziele implementiert, der die Internalisierung von technologischen Externalitäten und somit ein höheres Wohlfahrtsniveau ermöglicht. Die Umweltpolitik sollte gegeben der großen technologischen Unsicherheiten vorsichtig sein, Vermeidungsanstrengungen zu verschieben und auf eine Wunderwaffe zu Lösung des Klimaproblems im Energiesektor zu warten.CO2 capture and storage,computable general equilibrium modeling,directed technical change,emission trading,technological uncertainty

Energy Biased Technical Change: A CGE Analysis

This paper studies energy bias in technical change. For this purpose, we develop a computable general equilibrium model that builds on endogenous growth models. The model explicitly captures links between energy, the rate and direction of technical change, and the economy. We derive the equilibrium determinants of biased technical change and show the importance of feedback in technical change, substitution possibilities between final goods, and general-equilibrium effects for the equilibrium bias. If the feedback effect is strong, or the substitution elasticity large, or both, our model tends to a corner solution in which only technologies are developed that are appropriate for production of non-energy intensive goods.Computable general-equilibrium models, Endogenous technical change, Energy, Environment

Directed Technical Change and Climate Policy

This paper studies the cost effectiveness of climate policy if there are technology externalities. For this purpose, we develop a forward-looking CGE model that captures empirical links between CO2 emissions associated with energy use, directed technical change and the economy. We find the cost-effective climate policy to include a combination of R&D subsidies and CO2 emission constraints, although R&D subsidies raise the shadow value of the CO2 constraint (i.e. CO2 price) because of a strong rebound effect from stimulating innovation. Furthermore, we find that CO2 constraints differentiated toward CO2-intensive sectors are more cost effective than constraints that generate uniform CO2 prices among sectors. Differentiated CO2 prices, through technical change and concomitant technology externalities, encourage growth in the non-CO2 intensive sectors and discourage growth in CO2-intensive sectors. Thus, it is cost effective to let the latter bear relatively more of the abatement burden. This result is robust to whether emission constraints, R&D subsidies or combinations of both are used to reduce CO2 emissions.Directed Technical Change, Climate Policy, Computable General Equilibrium Model, R&D

Energy Biased Technical Change: A CGE Analysis

This paper studies energy bias in technical change. For this purpose, we develop a computable general equilibrium model that builds on endogenous growth models. The model explicitly captures links between energy, the rate and direction of technical change, and the economy. We derive the equilibrium determinants of biased technical change and show the importance of feedback in technical change, substitution possibilities between final goods, and generalequilibrium effects for the equilibrium bias. If the feedback effect is strong, or the substitution elasticity large, or both, our model tends to a corner solution in which only technologies are developed that are appropriate for production of non-energy intensive goods. --computable general-equilibrium models,endogenous technical change,energy,environment

Technological uncertainty and cost-effectiveness of CO2 emission trading schemes

This paper studies implications of uncertainty about the arrival date of a competitive CO2 backstop technology for the design of cost-effective CO2 emission trading schemes. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO2 emissions associated with energy use, the rate and direction of technical change and the economy. We specify CO2 capture and storage (CCS) as the backstop technology whose competitiveness is anticipated or not. We find that the discounted welfare loss associated with the environmental target is lower if CCS is not anticipated and that CO2 shadow prices are then relatively high in the years before CCS is competitive. By not simply postponing the implementation of an emission reduction strategy until CCS is competitive, one relies more on economy-wide technical change and its welfare-enhancing technology externalities, thus allowing for a higher steady state

Directed Technical Change and the Adoption of CO2 Abatement Technology: The Case of CO2 Capture and Storage

Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).This paper studies the cost effectiveness of combining traditional environmental policy, such as CO2 trading schemes, and technology policy that has aims of reducing the cost and speeding the adoption of CO2 abatement technology. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO2 emissions associated with energy use, directed technical change and the economy. We specify CO2 capture and storage (CCS) as a discrete CO2 abatement technology. We find that combining CO2-trading schemes with an adoption subsidy is the most effective instrument to induce adoption of the CCS technology. Such a subsidy directly improves the competitiveness of the CCS technology by compensating for its markup over the cost of conventional electricity. Yet, introducing R&D subsidies throughout the entire economy leads to faster adoption of the CCS technology as well and in addition can be cost effective in achieving the abatement target.This study received funding from the MIT Joint Program on the Science and Policy of Global Change, which is supported by a consortium of government, industry and foundation sponsors

Directed Technical Change and Climate Policy

Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).This paper studies the cost effectiveness of climate policy if there are technology externalities. For this purpose, we develop a forward-looking CGE model that captures empirical links between CO2 emissions associated with energy use, directed technical change and the economy. We find the cost-effective climate policy to include a combination of R&D subsidies and CO2 emission constraints, although R&D subsidies raise the shadow value of the CO2 constraint (i.e. CO2 price) because of a strong rebound effect from stimulating innovation. Furthermore, we find that CO2 constraints differentiated toward CO2-intensive sectors are more cost effective than constraints that generate uniform CO2 prices among sectors. Differentiated CO2 prices, through technical change and concomitant technology externalities, encourage growth in the non-CO2 intensive sectors and discourage growth in CO2-intensive sectors. Thus, it is cost effective to let the latter bear relatively more of the abatement burden. This result is robust to whether emission constraints, R&D subsidies or combinations of both are used to reduce CO2 emissions

Energy Biased Technical Change : A CGE Analysis

This paper studies energy bias in technical change. For this purpose, we develop a computable general equilibrium model that builds on endogenous growth models. The model explicitly captures links between energy, the rate and direction of technical change, and the economy. We derive the equilibrium determinants of biased technical change and show the importance of feedback in technical change, substitution possibilities between final goods, and general equilibrium effects for the equilibrium bias. If the feedback effect is strong, or the substitution elasticity large, or both, our model tends to a corner solution in which only technologies are developed that are appropriate for production of non-energy intensive goods

Numerical and experimental study of dispersive mixing of agglomerates

Best paper 2006 award in the Extrusion divisionInternational audienceThe degree of filler dispersion has a major influence on the physical properties of rubber compounds. Typical fillers, e.g. carbon black and silica, are difficult to disperse, particularly if they are fine and low structured. As a result, the quantity of undispersed fillers generally amounts for 1% to 10% of the compound. The elimination, or at least the reduction, of agglomerates will result in rubber parts (e.g. tires, seals, belts) with improved properties and higher reliability. Clearly, a better understanding of the physics of batch mixers would help improve their mixing performance. Due to the complexity of the real process, experiments on a representative device were held from which a model has been deduced. It appears to be a generalization of the law of Kao and Mason, but for high viscous matrices. The next step was to get a model available for statistically large number of pellets as can be found in any sample taken out of the mixer. A statistical approach is used where we define a model describing the evolution of mass density function of agglomerate sizes. Eventually, we implement this model within available numerical simulation tools to estimate dispersion in real mixers

Lower school performance in late chronotypes: underlying factors and mechanisms

Success at school determines future career opportunities. We described a time-of-day specific disparity in school performance between early and late chronotypes. Several studies showed that students with a late chronotype and short sleep duration obtain lower grades, suggesting that early school starting times handicap their performance. How chronotype, sleep duration, and time of day impact school performance is not clear. At a Dutch high school, we collected 40,890 grades obtained in a variety of school subjects over an entire school year. We found that the strength of the effect of chronotype on grades was similar to that of absenteeism, and that late chronotypes were more often absent. The difference in grades between the earliest 20% and the latest 20% of chronotypes corresponds to a drop from the 55th to 43rd percentile of grades. In academic subjects using mainly fluid cognition (scientific subjects), the correlation with grades and chronotype was significant while subjects relying on crystallised intelligence (humanistic/linguistic) showed no correlation with chronotype. Based on these and previous results, we can expand our earlier findings concerning exam times: students with a late chronotype are at a disadvantage in exams on scientific subjects, and when they are examined early in the day