Decarbonization with heterogeneous knowledge creation and technology tipping
Lucas Bretschger  1@  
1 : Department of Management, Technology, and Economics [ETH Zürich]

Achieving the internationally agreed climate targets will require major efforts in the provision of renewable energies that are supported by effective public policies. The paper presents an endogenous growth model with polluting and clean energies that are produced with knowledge, labor, raw material, and infrastructure. Knowledge stock is heterogeneous i.e. it differs between the economic applications and is accumulated through innovations on the aggregate level and in the provision of dirty and clean goods in the energy sector. Clean energy gains market share once it reaches a critical threshold that depends on sectoral and cross-sectoral knowledge diffusion. Carbon taxes and clean energy infrastructure subsidies have a symmetrical effect on technology tipping and the speed of the energy transition. The transition speed determines the demand for infrastructures in the two energy sectors, which may influence political decisions on the stringency of climate policy.


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