NBER Study - Innovation and Climate Policy

NBER (Popp, Purchase Req'd) - Reducing emissions of the greenhouse gases that cause climate change will require dramatic changes in the way that energy is produced and consumed. The cost of technological changes such as alternative energy sources and improved energy efficiency will play a large role in determining the overall cost of combating climate change. The development of these technologies will be heavily influenced by government policy. Both environmental and R&D policies provide incentives encouraging the development of clean technologies. Understanding the incentives provided by these policies, and their influence on the development of new technologies, is important for understanding the ultimate effects of climate policy. This chapter reviews the literature on environmental innovation and diffusion, with a focus on studies relevant to the development of clean energy technologies necessary to address climate change. I discuss the implications of this literature for the development of climate policy.

Implications for Energy Innovation from the chemical industry

NBER (Arora, Gambardella) - The history of innovation in the chemical industry offers many insights for accelerating energy innovation. In this chapter, we begin by laying out the early history of the chemical industry for an overview of the role innovation has played in its development. We then explore three noteworthy historical experiences. We describe the switch in feedstocks from coal to oil, and briefly analyze two government programs that have attempted to promote innovation: synthetic rubber and synfuels. We take a close look at the role that specialized engineering firms have played in the diffusion of important innovations, and we detail the effect that government policies have had on fostering innovation. In particular, we highlight the role of anti-trust policies, and of policies for protecting intellectual property rights.