DP14033 Technology Treaties and Climate Change

Author(s): Hans Gersbach, Marie-Catherine Riekhof
Publication Date: October 2019
Keyword(s): Climate Change Mitigation - Technology Promotion - R&D - International Emissions Permit Markets - International Treaty - Externalities
JEL(s): H23, O31, Q54
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14033

We introduce an international technology treaty ("Tech Treaty") that couples the funding of research for a more advanced abatement technology with an international emissions permit market. While each country decides on domestic permit issuance, a fraction of these permits is auctioned by an international agency. Auction revenues scale up license revenues for the innovators of abatement technologies. We show that such a treaty increases innovations and decreases emissions under plausible conditions compared to an emissions trading system without additional technology agreement. Finally, we discuss how a Tech Treaty may inspire next steps in existing technology programs.