The effects of carbon pricing and taxes on induced innovation

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Type Research Project

Funding Bodies

Duration Sept. 1, 2020 - Aug. 31, 2023


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Abstract (English)

Technological change will be key to succeeding in the battle against climate change since current technologies are not sufficient to achieve the necessary greenhouse gas (GHG) reductions. This project tries to answer the following research questions: Can technological change be directed through the use of carbon taxes and emission pricing to "green" technologies? Are these "market-based" instruments more or less effective than "command-and-control" policy instruments (e.g. renewable quotas, subsidies, regulation) to direct technological change? More generally, which instruments are most effective to increase "green" innovation in different sectors of the economy, and when?

Our main interests are:
- Do carbon policies direct technological change towards green technologies
- and if so, when is carbon pricing more efficient than command-and-control measures?
- Are there heterogeneous effects across sectors
- and if so, what determines this heterogeneity (e.g. closeness to the market)?


  • Austrian Central Bank - Austria



  • 5334 Political economic policy (Details)
  • 5350 Innovation research (Details)
  • 5370 Industrial economics (Details)
  • 5924 Environmental economics (Details)