The transition to endogenous technical change in climate-economy models: A technical overview to the innovation modeling comparison project

Jonathan Köhler, Michael Grubb, David Popp, Ottmar Edenhofer

Research output: Contribution to specialist publicationArticle

74 Scopus citations

Abstract

This paper assesses endogenous technical change (ETC) in climate-economy models, using the models in the Innovation Modeling Comparison Project (IMCP) as a representative cross-section. ETC is now a feature of most leading models. Following the new endogenous growth literature and the application of learning curves to the energy sector, there are two main concepts employed: knowledge capital and learning curves. The common insight is that technical change is driven by the development of knowledge capital and its characteristics of being partly non-rival and partly non-excludable. There are various different implementations of ETC. Recursive CGE models face particular difficulties in incorporating ETC and increasing returns. The main limitations of current models are: the lack of uncertainty analysis; the limited representation of the diffusion of technology; and the homogeneous nature of agents in the models including the lack of representation of institutional structures in the innovation process.

Original languageEnglish (US)
Pages17-55
Number of pages39
Volume27
NoSPEC. ISS. MAR.
Specialist publicationEnergy Journal
StatePublished - Mar 29 2006

ASJC Scopus subject areas

  • Economics and Econometrics
  • Energy(all)

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