A review of technical change in assessment of climate policy

Climate policy is often discussed as a lever with which to bring about clim ate-friendly technical innovation and diffusion. However, quantitative poli cy assessments routinely treat technological change as a factor that is ind ependent of policy. Stabilizing atmospheric concentrations of CO2 cannot be achieved through marginal changes in the way we supply and use energy. The only path to stabilization of climate over the next century that is consis tent with widely accepted population and economic-growth scenarios involves substantial decoupling of energy services from carbon emissions. The requi red rate of structural and technical change for such a goal has been experi enced only in the wake of economic and resource crises and for periods of a decade or less. Historic rates of structural and technical change averaged over a century are far from adequate for stabilizing climate. In this pape r, we review technical changes in the energy system and a few instances in which energy economic models have begun to include technical change as an e ndogenous feature of their assessments. Finally, we consider the implicatio ns of considering endogenous technical change for critical climate policy q uestions, such as the cost of control and the appropriate timing of the emi ssions mitigation effort.