Research Papers
Working Papers
Wind and solar are driving the clean transition in electricity: this paper uses panel data to investigate how these technologies substitute with dirty (fossil fuel) electricity generation. Production functions with a constant and a variable elasticity of substitution are estimated. Results suggest a higher elasticity of substitution than previous estimates, aligning with long-run analysis from electricity dispatch models and assumptions often made in economic models. Little evidence is found of the elasticity decreasing so far. However, the uptake of wind and solar decreases the utilisation rates of dirty capital.
The elasticity of substitution parameterises how easily wind and solar can replace fossil fuels in a clean transition of electricity supply. I infer this parameter from some electricity dispatch model literature and present a simple dispatch model replicating the key result: a high elasticity for a low share of wind and solar, which decreases as this share rises because integrating intermittent technologies becomes increasingly difficult. Such decreasing substitutability may imply greater costs from regions adopting different carbon prices.
Access to finance is a major barrier to clean innovation. We incorporate heterogeneous and endogenous financing costs in a directed technical change model and identify optimal climate mitigation policies. The presence of a financing experience effect pushes the policymaker to strengthen policies in the short-term, both to shift innovation and production towards clean sectors and to reduce the financing cost differential across technologies, which further facilitates the transition. The optimal climate policy mix between carbon taxes and clean research subsidies depends on the drivers of the experience effect. In our benchmark scenario, where clean financing costs decline as cumulative clean output increases, we find an optimal carbon price premium of 47% in 2025, relative to a case with no financing costs.
Peer-Reviewed Publications
Social costs for methane and carbon dioxide emissions, from the risk of climate tipping events and deterministic damages, are derived in an analytically tractable model. In the core model: social costs from tipping risks rise with income, just as they do for deterministic damages, and depend on only a few parameters. Consequently, methane’s weight (its social cost relative to carbon dioxide) is constant and independent of temperature projections. But other damage and tipping probability formulations assumed in the literature imply methane’s weight varies over time and with temperature projections.
Engineering biology (EngBio) is a dynamic field that uses gene editing, synthesis, assembly, and engineering to design new or modified biological systems. EngBio applications could make a significant contribution to achieving net zero greenhouse gas emissions. Yet, policy support will be needed if EngBio is to fulfil its climate mitigation potential. What form should such policies take, and what EngBio applications should they target? This paper reviews EngBio’s potential climate contributions to assist policymakers shape regulations and target resources and, in so doing, to facilitate democratic deliberation on desirable futures.
A three-sector – services, clean and dirty - integrated assessment model with endogenous technology is described. Optimal policy leads to a period of intense clean research and requires a carbon tax and clean research subsidies. Using multiple calibrations, I explore the relative performance of these instruments when acting alone, along with a clean production subsidy and a dirty research tax. A carbon tax wins in most, but if optimal policy occurs after 2050, each instrument wins in some calibrations. Both a carbon tax and a clean production subsidy should apply if research instruments are unavailable.
We discuss the prospects of recent promising methods of producing ammonia without fossil fuels. Despite demonstrating efficiency gains over previous similar approaches, the novel biological and electrochemical pathways require further large improvements to compete with electricity-powered Haber-Bosch. As some literature asserts that future production will shift to smaller scales, such as on-farm, we qualitatively discuss the economics of scale of future green ammonia production.
The framework used to endogenise technology growth by Acemoglu, Aghion, Bursztyn, and Hemous (2012) can exhibit increasing returns to research and hence multiple equilibria, including an unstable interior equilibrium. This paper discusses several selection methods of determining which equilibrium applies. Alternative methods can produce substantially different results when the elasticity of substitution between clean and dirty inputs is high.
Book Reviews
Other Papers
Some short run dynamics for CGE models. Presentation at the 18th Annual Conference on Global Economic Analysis 2015, Melbourne, Australia.
Wiskich A. (2013). Modelling electricity generation based on a competitive market in the GTAP model. Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China.
Cao L., Wiskich T., Hodges C., McAndrew K. (2012). Comparing Policy Impacts of Different Household Demand Systems in a CGE Model. Presented at the 15th Annual Conference on Global Economic Analysis, Geneva, Switzerland.
Wiskich A., Fisher B., Matysek A., Newton P. (2011). Modelling Climate Change Impacts and Agriculture. Presented at the 14th Annual Conference on Global Economic Analysis, Venice, Italy.
Wiskich A. (2010). Computing game-theoretic equilibria in GTAP: Optimising regional climate change policies. Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia.