sectoral economic costs and benefits of ghg mitigation - IPCC

Renewable Energy
The Impacts of Carbon Constraints on Power Generation and
Renewable Energy Technologies 1
Patrick Criqui, Nikos Kouvaritakis and Leo Schrattenholzer 2
1 Introduction
Carbon emission constraints may have significant impacts on the future development of energy
technologies at world level. First of all, they will make low-carbon technologies relatively more
attractive even with unchanged costs and performances. But what is probably still more
important is the fact that carbon constraints, anticipated by industry and technology suppliers,
may also induce an acceleration in the performance improvements of low-carbon technologies.
Better market perspectives for economically and environmentally better technologies, such is the
consequence to be expected from the introduction of carbon constraints at a regional or world
level.
The modelling and assessment of these cumulative effects of carbon constraints on energy
technologies poses however important methodological problems. In spite of significant
developments in the economics of technical change, both in the neo-classical and in the
“evolutionary” stream, there has been few attempts to measure the impacts of the “inducement”
factors to technology dynamics. This is largely because innovation always incorporates an
uncertainty and stochastic dimension and because it is difficult to associate deterministic
mechanisms to technology dynamics. For instance, there have been some efforts to measure
“learning by doing” phenomena, but only few attempts have been made to investigate the
impacts of R&D - public and private - on performances at a technology level (a noticeable
exception being that of Watanabe and Griffy-Brown (1999) for solar PV technology). This is
probably due to the lack of exhaustive statistical bases, but also to the existence of notorious
examples of large R&D programs with small or even no results. The theoretical concepts and
empirical data on induced and endogenous technical change are reviewed in Section 2. of this
paper.
The paper then presents the methodology and results of a research which has attempted to
develop an analytical and modelling framework for the assessment of the impacts of carbon
constraints on power generation and renewable technologies. Section 3. proposes a description of
the corresponding developments in the POLES model, which aimed at an endogenisation of
technology dynamics. Independently of the methodology and data problems that had to be – and
were only partially - solved, the logical structures adopted to address this issue can be described
as following:
- the introduction of a carbon constraint will in some way or another translate into a “carbon
value” for avoided emissions and thus in a cost premium for low- or no-CO 2 technologies;
1
This paper is a synthetic presentation of part of the results of a research on “Modelling of Energy
Technology Dynamics”, undertaken and financed in a framework program of the EU – DG XII (TEEM
project - JOULE III Program). Full information on the results of this project can be found in the TEEM
Project Final Technical Report, European Commission (next to be published in the International Journal of
Global Energy Issues).
2
We thank all our colleagues in the TEEM study for helpful common work and discussions, and
particularly P. Capros, coordinator of the project, and A. Soria - S. Isoard (IPTS-Seville) for their
contributions to endogenous technology modelling in the POLES model. Corresponding author:
criqui@upmf-grenoble.fr
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