Work Package 6 – Spillovers from Clean versus Dirty technologies

By ,

Participants: Imperial

In light of the political difficulties of pursuing Climate Policy and its current unilateral character, governments are increasingly motivating any policy measures not only on the grounds of preventing Climate Change but also by suggesting that such policies could even in the short run provide more growth and/or employment. Often such claims are substantiated by pointing to the growth of environmental industries in countries pursuing more stringent pieces of environmental regulation (e.g. wind turbine producers in Germany or Denmark). However, the growth of a single industry does not imply that the same economy as a whole would have grown faster in the short run without the policy responsible. For this to happen the policy does not only need to induce a response desirable from a Climate point of view but at the same time successfully correct a market failure which has been hampering the economy in question irrespective of the Climate problem. Often it is suggested that support for innovation related to clean technologies would lead to larger spillovers or faster rates of innovation than in other areas. This raises several concerns:

  1. While theoretically possible, there is no empirical evidence that this is the case;
  2. There could also be important differences between the wide range of climate relevant technologies – ranging from alternative engines for cars to new building materials – in their scope to generate spillovers and/or faster short run growth and
  3. Any short run advantages that might arise could differ widely between different countries.

The objective of this work package is to quantify spillovers from clean technologies, based on micro-level analysis, to be used for macro-modelling of the impact of green innovations.