Project Mechanisms and Technology Di usion

Description

Niveau: Secondaire, CAP
Project Mechanisms and Technology Di?usion in Climate Policy March 15, 2010 Abstract The paper deals with the di?usion of GHG mitigation technologies in developing countries. We develop a model where an abatement technology is progressively adopted by ?rms and we use it to compare the Clean Development Mechanism (CDM) with a standard Cap and Trade scheme (C&T). In the presence of learning spillovers, we show that the CDM yields a higher social welfare than C&T if the ?rst adopter receives CDM credits whereas the followers do not. The analysis leads us to suggest two CDM design improvements: re- laxing the additionality constraint for projects which generate signi?cant learning externalities, and allowing collective CDM projects which could internalize learning externalities. Keywords : climate policy, technology di?usion, Kyoto Protocol, Clean Development Mechanism, emissions trading JEL code: H87, O33, Q55, Q54 1

• can also


• adoption


• countries


• allowing industrialized countries


• cdm


• learning spillovers


• climate treaties


• collective cdm


• receives credits


• technology di?usion

Sujets

• CAP
• United Nations
• Adoption
• Country

Informations

• Publié par: profil-vauh-2012
• Nombre de lectures: 31
• Langue: English

Extrait

ProjectMechanismsandTechnologyDi¤usion inClimatePolicy March15,2010 Abstract Thepaperdealswiththedi¤usionofGHGmitigationtechnologiesin developingcountries.Wedevelopamodelwhereanabatementtechnology isprogressivelyadoptedby…rmsandweuseittocomparetheClean DevelopmentMechanism(CDM)withastandardCapandTradescheme (C&T).Inthepresenceoflearningspillovers,weshowthattheCDM yieldsahighersocialwelfarethanC&Tifthe…rstadopterreceivesCDM creditswhereasthefollowersdonot. TheanalysisleadsustosuggesttwoCDMdesignimprovements:re- laxingtheadditionalityconstraintforprojectswhichgeneratesigni…cant learningexternalities,andallowingcollectiveCDMprojectswhichcould internalizelearningexternalities. Keywords:climatepolicy,technologydi¤usion,KyotoProtocol,Clean DevelopmentMechanism,emissionstrading JELcode:H87,O33,Q55,Q54 1

1Introduction Duetoeconomicgrowth,developingcountriesareexpectedtoovertakeindustri- alizedcountriesastheleadingsourceofgreenhousegases(GHG)inthemedium orlongterm.Thetransferanddi¤usionofclimate-friendlytechnologiesinthese economiesisseenasakeymeansforsolvingtheclimatechangeproblem.Ac- cordingly,technologyissuesareincludedinboththeUnitedNationsFramework ConventiononClimateChange(UNFCCC)anditsKyotoProtocol.TheAsia- Paci…cPartnershiponCleanDevelopmentandClimateinitiatedbytheU.S. administrationin2005alsoplacesaverystrongemphasisonthedevelopment andsharingofmoree¢cientenergytechnologies. TheCleanDevelopmentMechanism(CDM)isconsideredbymanyasanim- portanttooltostimulatetechnologytransferanddi¤usion.Itisanarrangement undertheKyotoProtocolallowingindustrializedcountrieswithagreenhouse gasreductioncommitment(theso-calledAnnex1countries)or…rmslocatedin thesecountriestoinvestinemissionreducingprojectsincountriesthathavenot madesuchcommitments(theAnnex2countries).Theseprojects,usuallycar- riedoutindevelopingcountries,provideacheaperalternativetocostlyemission reductionsinindustrializedcountries.Theyalsoassisthostcountriesinachiev- ingsustainabledevelopement.TheCDMcan…nallycontributetointernational technologytransferby…nancingprojectsusingtechnologiesnotavailableinthe hostcountriesandtotechnologydi¤usionwithinthecountries. 1 Suchtransfers havegraduallygainedinimportanceinpolicydebates;theyareinparticularat thecoreofongoingtalksonthePost-Kyotoregime. Inthispaperwedevelopamodeltostudywhetheremissionstradingcan yieldthesociallyoptimalpathoftechnologydi¤usion 2 .WefocusontheCDM, 1 ItisworthnotingthattheCDMdoesnothaveanexplicittechnologytransferanddi¤usion mandateundertheKyotoProtocol.ButtheCDMisclearlylinkedtothetechnologicalissue inthepolicydebateonclimatechange,andinparticular,inpost-Kyototalks. 2 Themodelimplicitlyreliesonarelativelynarrowde…nitionoftechnologytransfer.In 2

whosespeci…cityliesintheadditionalityrequirement,whichisthat…rmsmay implementaCDMprojectonlyifemissionscreditsmaketheprojectprof- itable.Inordertoinvestigatetheimpactofadditionality,wecomparetheCDM withthetraditionalCapandTradeprogram(C&T)inwhichanyabatement -whetherprivatelypro…tableornot-makesemissionscreditsavailable.We thencharacterizetwowaystoimprovethee¢ciencyoftheCDM:relaxingthe additionalityconditionsandallowingcollectiveCDMs. Themodeldescribesn…rmslocatedinahostcountrywhichinitiallyoperate withanoldtechnology.These…rmscouldadoptacleanertechnologysimultane- ouslyorsequentially.The…rstadoptionisusuallytheinternationaltechnology transfer,sincethetechnologywasnotpreviouslyavailableinthecountry.Sub- sequentadoptionscorrespondtothedi¤usionwithinthehostcountry. Adoptionentailsa…xedcostwhichendogenouslydecreasesoncethetech- nologyhasbeenintroducedinthehostcountry.Inreality,thatdecreasemay occurbecauseobservingtheoutcomeofthe…rstadoptionofthenewtech- nologyreducesuncertaintyabouttechnologybene…tsforsubsequentadopters (called"followers"),orthe…rstcompanytoadopt-the"leader"-accumu- lateslearning-by-doingskillswhichdi¤usethroughvariouschannels(e.g.labor market)topotentialadopters. Theselearningspilloversgeneratetwotypesofine¢ciency.The…rstisthe standardunder-provisionproblem.Thepropensityfora…rmtotakethelead inadoptingnewtechnologyislow,since…rmswhomayconsiderthestepfailto takeintoaccountpositiveexternalities,therebyhinderingtechnologytransfer. Thesecondine¢ciencyisacoordinationproblemthatresultsfromthedynamic characterofthedi¤usionprocess.All…rmswouldprefertofollowsothatthey canenjoyareducedadoptioncost.Butfollowingrequiresthatone…rmtakethe lead.Thisisadynamicversionofa"chickengame"whereboth…rmsderivea particular,itisnotdesignedtoanalyzeissuessuchashumancapacitybuilding. 3