Working Paper: CEPR ID: DP14033
Authors: Hans Gersbach; Marie-Catherine Riekhof
Abstract: We introduce an international technology treaty ("Tech Treaty") that couples the funding of research for a more advanced abatement technology with an international emissions permit market. While each country decides on domestic permit issuance, a fraction of these permits is auctioned by an international agency. Auction revenues scale up license revenues for the innovators of abatement technologies. We show that such a treaty increases innovations and decreases emissions under plausible conditions compared to an emissions trading system without additional technology agreement. Finally, we discuss how a Tech Treaty may inspire next steps in existing technology programs.
Keywords: climate change; mitigation; technology promotion; R&D; international emissions permit markets; international treaty; externalities
JEL Codes: H23; Q54; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tech treaty (F13) | Increased auction revenues (D44) |
| Increased auction revenues (D44) | Higher R&D funding (O32) |
| Higher R&D funding (O32) | Advanced abatement technologies (Q52) |
| Advanced abatement technologies (Q52) | Lower emissions (Q52) |
| Tech treaty (F13) | Tightened permit issuance (R48) |
| Tightened permit issuance (R48) | Lower emissions (Q52) |