ETech+: Technology policy and technical change, a dynamic global and UK approach

Funded by: Tyndall Centre

Duration:

June 2002 to May 2004

PSI researchers:


Background, summary and aims

Background and Aims

The goal of the Tyndall Centre is to contribute interdisciplinary research to address climate change policy analysis. This project contributes several fundamental elements to this research. This is a collaborative project between PSI, the Imperial College Centre for Environmental Policy and Technology (ICCEPT), the Cambridge University Department of Applied Economics and the University of Manchester Institute of Science and Technology (UMIST). This description of the project is only concerned with the PSI elements of the project, which nevertheless inform the rest of the project’s work. For further information on the whole project see http://www.tyndall.ac.uk/research/theme1/summary_t2_12.shtml.

Project Design

The project is analysing current UK climate change policy, in particular the Climate Change Levy (CCL) policy package (including the Climate Change Agreements, CCAs) and its impacts on the UK economy and technology policy. It is part of a wider investigation into the effect of relative prices on the take up of low-carbon energy technologies, including wind energy and Combined Heat and Power (CHP). The CCL analysis is estimating the announcement effect of the CCL, by re-estimating the Cambridge MDM model (run by Cambridge Econometrics) over 1970-2001 using dummy variables to simulate the effect of the CCL in the years 1998, 1999 and 2000 (after the CCL had been announced but before it had been implemented). It will also use the model to estimate the effects of the CCAs, both on carbon emissions in the relevant industrial sectors, and on the emissions required by other sectors in order to attain a given level of emission reduction, as well as on the economy. This estimate of the effectiveness of the price mechanism, in combination with other instruments, in bringing about emissions reduction will be supplemented the investigation of the price differential between the prices of low carbon technologies and fossil fuels, and the complementary policy instruments, which have been found to be effective in developing wind energy and CHP in other countries.

Importance of Research

The work is clearly important in relation to UK climate change policy, which is seeking the most cost-effective combination of policy instruments to achieve its emission reduction targets. In addition, it will contribute insights to the effectiveness more generally of the price mechanism in stimulating technological change in a social desirable direction. It will also feed into the overall modelling endeavour that is an important component of the overall Tyndall research strategy.

For further information about this project please contact Paolo Agnolucci