Conference Agenda

We construct an overlapping generations model in which the choice between

dirty and clean technology hinges on the economy’s capital stock, susceptible to

climate-induced depreciation. The process of capital accumulation contributes to

environmental emissions, yet their intensity can be mitigated through a shift to

cleaner production methods. The tipping point of technological transition is en-

dogenously determined, leading to a diverse range of potential long-term outcomes

shaped by capital endowment, pollution intensity, climate vulnerability, and clean

factor productivity. Our analysis reveals the possibility of an economy converging

into a “carbon trap”, characterized by a sustained equilibrium marked by elevated

pollution and diminished income, despite the feasibility of pursuing green growth.

Additionally, we present optimal policy measures and simulations that highlight the

temporal disparities between the socially optimal timing for transitioning to green

technology and the timing dictated by market forces. Finally, to account for the

high upfront costs of starting clean production, we extend the model by including

a non-convexity in the production structure of the clean technology.

The Belt and Road Initiative (BRI) has promoted economic growth of participating countries while giving rise to profound environmental consequences. To steer the BRI towards a low-carbon and green development, it is necessary to analyze past trajectories and future trends of BRI’s CO2 emissions. To this end, we assess the patterns and determinants of emission flows along the BRI during 2005-2030 using the multi-region structural decomposition analysis technique. For the period 2005-2015, we show that intermediates export of the BRI embodied more CO2 emissions than final goods export. The significant technological improvement only partly offset the emission growth stemming from the deteriorated cross-border production structure and the surging final demand of the BRI in the past. For the period 2015-2030, our prospective analysis indicates that emissions embodied in exports of participating countries increase by over 20% in the reference scenario where historical development patterns of the BRI continue. The rise might be even higher if the initiative ends. On the contrary, enhancing diffusion and adoption of low-carbon technologies and promoting green trade within the BRI show substantial emission mitigation potential. Our empirical results reveal directions and priorities for policymaking in the pursuit of a green BRI.

It is widely recognized that a cost-efficient way to achieve the climate targets of the Paris agreement requires investment in carbon capture and storage (CCS). However, to trigger sizeable investment in CCS the carbon price must exceed the historic carbon prices. This paper examines whether a higher price of carbon enhances competition of storage services and thus leads to lower costs of CCS. Using a Hotellling model with two storage sites, each being located at each end of the Hotelling line, we show that there are three alternative competition regimes. The level of the carbon tax determines which regime materializes. For “low” carbon taxes, there is no competition between the two storage firms. For “high” carbon taxes, there is standard Bertrand competition between the two storage firms. Finally, for “intermediate” carbon taxes, there is so called partial competition with multiple equilibria. Contrary to the standard conclusion on competition, we find that when each storage site is imposed to charge the same price for all its clients, the price under monopoly is lower than under partial competition. We offer several extensions of the model as well as numerical illustrations. With our reference parameter values and a carbon tax sufficiently high to reach the Paris targets, we find that we may end in a partial competition regime.

Innovation of clean technologies is critical to mitigating increasing environmental

challenges, while it can generate revenues for the inventing firms and beyond through

technology spillovers. However, the extent to which clean technologies are generating

private and social economic benefits remains poorly understood to date, due to a lack

of suitable data sources. Using a unique dataset disaggregating commercial activities

of global publicly listed firms based on a new green taxonomy, this paper shows the

variation of green revenues during 2009-2016. We document a smooth increase in

average green revenues over years. This increase is mainly driven by the expansion of

revenues from green products but not the structure change between green and non-

green revenues. We find that firms’ green revenues are enhanced by not only their

own clean innovation but clean technology spillovers from other neighbouring firms

close in the technological and product market spaces. We also find that the growing

maturity of clean technologies facilitates firms to obtain more green revenues, partic-

ularly for firms with more own clean technologies. Firms with larger sizes and higher

technology capacities benefit more from their own and others’ clean innovation. The

new evidence on clean technology spillovers implies considerable social benefits of

clean innovation and the need to provide policy support to encourage investments in

clean technologies.