Mark Paul

Mark Paul

02-11-2022

18:24

Most climate models assume tech change is exogenous, thus there's no learning by doing, and no major role for gov investment. Thus, the models wrongly assume abatement today has no effect on reducing costs for abatement tomorrow. 1/

We know this isn't how the world works. Just look at the rapid decline in costs for solar and storage, costs that have largely been pushed down thanks to R&D + early deployment. Yet by ignoring this, models assume decarbonization is far costlier than it is in reality. 2/

When models do integrate endogenous technical change, that tend to find it doesn't matter that much. Why? Cause R&D in climate takes away from R&D in other sectors, thus slowing growth. Of course, there's no fixed pot of R&D money in the entire economy. /fin

For those interested in just how vital public R&D is, and how it can reshape our economy, I suggest you pick up @MazzucatoM's book!


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