| By: |
Lucas Bretschger (CER-ETH – Center of Economic Research at ETH Zurich, Zuerichbergstrasse 18 8092 Zurich, Switzerland) |
| Abstract: |
The paper develops the concept of "Economic Pathways" (EPs), which
characterize theory-based scenarios for an economy that strives to achieve
decarbonization by mid-century. The theoretical framework derives closed-from
analytical solutions for consumption, innovation, emissions, and population.
The EPs differ in the stringency of assumed policies and associated income and
emission development. Unlike the well-known "Shared Socioeconomic Pathways",
they allow important causalities between the economy and the environment to be
included and significantly narrow the scope of likely future developments. The
quantitative part serves to illustrate the long-term consequences of climate
policy. I show that deep decarbonization only moderately delays economic
development, but requires increasing escalation of the carbon price. Subsidies
to the research sector support income development significantly. The paper
argues that the adoption of more stringent climate policies becomes more
likely as the phase-out of fossil fuels increases. The "Green Road" is not
only feasible, but also attractive and realistic. |
| Keywords: |
Climate policies, consumption growth, population growth, endogenous innovation, economic pathways |
| JEL: |
Q43 O47 Q56 O41 |
| Date: |
2022–09 |
| URL: |
http://d.repec.org/n?u=RePEc:eth:wpswif:22-375&r= |