| This dissertation explores the role and design of environmental technology policy when environmental innovation is embodied in emerging environmental technologies such as photovoltaic cells or fuel cells. The dissertation consists of three individual studies, all of which use a simplified, general model industry between an emerging environmental technology and an entrenched, more-polluting technology. It clarifies the situations in which environmental technology policy can achieve high welfare and those in which it cannot; and it separates the possible situations an emerging environmental technology might face into four scenarios, each with its own technology policy recommendations. The second study attempts to clarify which of two factors is having a larger limiting effect on private investment in photovoltaics: the failure to internalize the environmental costs of fossil fuel electricity generation or a broad set of innovation market failures that apply to innovation irrespective of environmental concerns. The study indicates that innovation market failures are probably having a significantly larger impact than incomplete internalization. The third study explores the effectiveness of adoption subsidies at encouraging private-sector innovation. The conclusion is that adoption subsidies probably have only a limited effect on long-term, private-sector research. Two important general conclusions of the dissertation are (1) that optimal technology policy should begin with technology-push measures and end with demand-pull measures; and (2) that the technological response to internalization instruments, such as emissions taxes, may be highly nonlinear. |
