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Modelling the redirection of technical change: The pitfalls of incorporeal visions of the economy

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  • Pottier, Antonin
  • Hourcade, Jean-Charles
  • Espagne, Etienne
Abstract
This paper discusses attempts to represent the role of R&D in the transition towards a low carbon economy through models with no meaningful granularity to inform the studied phenomenon. By means of a critical analysis of (Acemoglu et al., 2012), we show that the advantage of these models, their analytical tractability, does not make up for their disadvantages, lack of control over policy implications and questionable numerical results. On the one hand, a comprehensive analysis of the results of Acemoglu et al. (2012) shows that even research subsidies do not pave the way for ambitious climate policies with low transitory costs, thus contradicting their policy message. On the other hand, critical parameters such as the elasticity of substitution between clean and dirty technologies, carbon sinks, or the productivity of researchers are not in accordance with existing scientific knowledge. We show that using more realistic parameters leads to even more pessimistic conclusions and that their model provides no leeway for overcoming them. We suggest that a too highly aggregated model can only describe an incorporeal economy and comes to a deadlock. We propose a more promising route for economic research in order to break this deadlock.

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  • Pottier, Antonin & Hourcade, Jean-Charles & Espagne, Etienne, 2014. "Modelling the redirection of technical change: The pitfalls of incorporeal visions of the economy," Energy Economics, Elsevier, vol. 42(C), pages 213-218.
    • Handle: RePEc:eee:eneeco:v:42:y:2014:i:c:p:213-218
    DOI: 10.1016/j.eneco.2013.12.003
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    Cited by:

    1. Lennox, James A. & Witajewski-Baltvilks, Jan, 2017. "Directed technical change with capital-embodied technologies: Implications for climate policy," Energy Economics, Elsevier, vol. 67(C), pages 400-409.
    2. Peter K. Kruse-Andersen, 2016. "Directed Technical Change and Economic Growth Effects of Environmental Policy," Discussion Papers 16-06, University of Copenhagen. Department of Economics.
    3. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," PSE-Ecole d'économie de Paris (Postprint) halshs-02087970, HAL.
    4. Bezin, Emeline, 2019. "The economics of green consumption, cultural transmission and sustainable technological change," Journal of Economic Theory, Elsevier, vol. 181(C), pages 497-546.
    5. Mattauch, Linus & Creutzig, Felix & Edenhofer, Ottmar, 2015. "Avoiding carbon lock-in: Policy options for advancing structural change," Economic Modelling, Elsevier, vol. 50(C), pages 49-63.
    6. Yang, Jun & Yang, Dingjian & Cheng, Jixin, 2024. "The non-rivalry of data, directed technical change and the environment: A theoretical study incorporating data as a production factor," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 417-448.
    7. Etienne Espagne, 2018. "Money, Finance and Climate: The Elusive Quest for a Truly Integrated Assessment Model," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 131-143, March.
    8. Tunç Durmaz & Fred Schroyen, 2020. "Evaluating Carbon Capture And Storage In A Climate Model With Endogenous Technical Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-47, February.
    9. Catalano,Michele & Forni,Lorenzo, 2022. "Fiscal Policies for a Sustainable Recovery and a Green Transformation," Policy Research Working Paper Series 9799, The World Bank.
    10. van den Bijgaart, Inge, 2017. "The unilateral implementation of a sustainable growth path with directed technical change," European Economic Review, Elsevier, vol. 91(C), pages 305-327.
    11. Peter K. Kruse-Andersen, 2019. "Directed Technical Change, Environmental Sustainability, and Population Growth," Discussion Papers 19-12, University of Copenhagen. Department of Economics.
    12. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," Post-Print halshs-02087970, HAL.
    13. Wiskich, Anthony, 2024. "A carbon tax versus clean subsidies: Optimal and suboptimal policies for the clean transition," Energy Economics, Elsevier, vol. 132(C).
    14. Fabian Stöckl, 2020. "Is Substitutability the New Efficiency? Endogenous Investment in the Elasticity of Substitution between Clean and Dirty Energy," Discussion Papers of DIW Berlin 1886, DIW Berlin, German Institute for Economic Research.
    15. Fabian Stöckl & Alexander Zerrahn, 2023. "Substituting Clean for Dirty Energy: A Bottom-Up Analysis," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(3), pages 819-863.
    16. Etienne Espagne, 2016. "Climate Finance at COP21 and After: Lessons Learnt," CEPII Policy Brief 2016-09, CEPII research center.
    17. Kostas Fragkiadakis & Panagiotis Fragkos & Leonidas Paroussos, 2020. "Low-Carbon R&D Can Boost EU Growth and Competitiveness," Energies, MDPI, vol. 13(19), pages 1-29, October.
    18. Patricia Laurens & Christian Le Bas & Stéphane Lhuillery & Antoine Schoen, 2017. "The determinants of cleaner energy innovations of the world’s largest firms: the impact of firm learning and knowledge capital," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(4), pages 311-333, May.
    19. Wiskich, Anthony, 2021. "A comment on innovation with multiple equilibria and "The environment and directed technical change"," Energy Economics, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Technological change; Endogenous growth; Climate; Energy substitutability;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

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