Table of Contents

Induced Technological Change

Foreword ii

Executive Summary iii

I. Introduction 1

A. The Climate Change Problem 1
B. The Importance of Technological Change for Climate Policy 2
C. Policies That Induce Technological Change 3
D. Promoting Technological Change Through Public Policy: Is It Justified? 5
E. Policy Issues Examined Here 6

II. ITC and the Costs of Emissions Abatement 8

A. Two Channels for ITC 8
B. Determinants of Cost Reductions from ITC 9
C. Some Simulation Results with ITC 13
D. General Insights 16

III. ITC and the Timing of Emissions Abatement 18

A. Clarifying the Issues 18
B. Some Results on ITC’s Implications for the Timing of Abatement 19

IV. The Value of Prior Announcements in the Presence of ITC 23

V. Why Inducing Additional Technological Change is Warranted,
    Despite Uncertainties 27

VI. Conclusions 30

Endnotes 32

References 36