RIEB Seminar (Jointly supported by:Grant-in-Aid for Scientific Research (S))
| Date&Time | Friday, December 9, 2016, 3:30pm-5:00pm |
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| Place | Seminar Room at RIEB (Kanematsu Memorial Hall, 1st Floor) |
| Intended Audience | Faculties, Graduate Students and People with Equivalent Knowledge |
| Language | English |
| Note | Copies of the paper will be available at Office of Promoting Research Collaboration. |
3:30pm-5:00pm
| Speaker | Youngho CHANG |
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| Affiliation | Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University |
| Topic | Energy R&D and Climate Change: An Endogenous Growth and Technology Model |
| Abstract | This study aims to examine how R&D in fossil fuels and backstop resources and resulting technology progress influence resource use, economic growth and climate change in the world economy. It constructs an economic growth model with two sectors and multiple resources, incorporating environmental constraints from climate change models such as general circulation models (GCMs). The model is expected to suggest two switching points: R&D and resource switching points. The technology progress appears to lead to the endogenous substitution among different energy resources and affect the speed of carbon dioxide accumulation in the atmosphere. A fossil fuel with the lowest conversion cost is to be used first and over time it is replaced by another fossil fuel with the next lowest conversion cost. R&D in fossil fuels and backstop resources appear to accelerate the substitution among fossil fuels by accumulating the knowledge stock of using fossil fuels and at the same time it eventually helps the economy switch to the backstop resources as zero extraction cost and the accumulation of knowledge stock of backstop resources make the cost of using backstop resources competitive to fossil fuels. With the accumulation of knowledge stock on backstop resources, fossil fuels will be eventually replaced by backstop resources as their costs become lower and competitive to fossil fuels thanking to no or little extraction cost and decreases in conversion costs. The resource switching point comes after the R&D switching point. This study also shows that the level of carbon emissions and the corresponding temperature change, which reflect how technological change and R&D influence climate change. The derived optimal trajectory of carbon tax rate indicates the cost of adapting to climate change. |