Innovation-Led Transitions in Energy Supply

Derek Lemoine

NBER Working Paper No. 23420
Issued in May 2017, Revised in June 2017
NBER Program(s):Environment and Energy Economics

I generalize a benchmark model of directed technical change in order to reconcile it with the historical experience of energy transitions. I show that the economy becomes increasingly locked-in to the dominant sector when machines and energy resources are substitutes, but a transition away from the dominant sector is possible when machines and energy resources are complements. Consistent with history, a transition in research activity leads any transition in resource supply. A calibrated numerical implementation shows that innovation is critical for climate change policy. A policymaker uses a U-shaped emission tax trajectory so as to immediately transition innovation away from the fossil sector, wait for clean technology to improve, and then hasten a transition in resource supply later in the century.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23420

Users who downloaded this paper also downloaded* these:
Lemoine w23549 Expect Above Average Temperatures: Identifying the Economic Impacts of Climate Change
Allcott and Greenstone w23386 Measuring the Welfare Effects of Residential Energy Efficiency Programs
Meng w22536 Estimating Path Dependence in Energy Transitions
Pizer and Sexton w23318 Distributional Impacts of Energy Taxes
Heutel w23692 Prospect Theory and Energy Efficiency
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us