@article{FæHn:332131,
      recid = {332131},
      author = {FæHn, Taran and Jacobsen, Karl and Bye, Brita},
      title = {Diffusion of Climate Technologies in Presence of an  Emissions Cap},
      address = {2011},
      pages = {25},
      year = {2011},
      note = {Presented at the 14th Annual Conference on Global Economic  Analysis, Venice, Italy},
      abstract = {The EU and other selected jurisdictions have independently  expressed high ambitions for greenhouse gas (GHG) control.  In absence of international, binding agreements the  reliance in such proclamations by individual governments  can, however, suffer. A uniform GHG pricing scheme, that  would otherwise be a first-best strategy for meeting a  national cap, may not be optimal if the agents perceive the  durability of the scheme as uncertain. Given this  assumption, this paper compares a uniform GHG pricing  system with two second-best options, one which combines  emissions pricing with subsidies to upfront investments in  climate technologies, and one with a public guarantee  arrangement that places the political risk on the shoulders  of the government. We use a technology-rich, dynamic CGE  model that accounts for abatement both within and beyond  existing technologies, the latter through investments in  alternative, climate-friendly technologies. We find that  domestic climate policies unable to stimulate investments  in new technological solutions will triple the costs of a  uniform GHG pricing system. Subsidising investments is a  remedy, though costly compared to a system that ensures  commitment from the government.},
      url = {http://ageconsearch.umn.edu/record/332131},
}