Green technology policies versus carbon pricing: An intergenerational perspective

Arbeitspapier

Technology policy is the most widespread form of climate policy and is often preferred over seemingly efficient carbon pricing. We propose a new explanation for this observation: gains that predominantly accrue to households with large capital assets and that influence majority decisions in favor of technology policy. We study climate policy choices in an overlapping generations model with heterogeneous energy technologies and distortionary income taxation. Compared to carbon pricing, green technology policy leads to a pronounced capital subsidy effect that benefits most of the current generations but burdens future generations. Based on majority voting which disregards future generations, green technology policies are favored over a carbon tax. Smart 'polluter-pays' financing of green technology policies enables obtaining the support of current generations while realizing efficiency gains for future generations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 23-017

Classification and Topics

• Classification: Wirtschaft ; Climate; Natural Disasters and Their Management; Global Warming ; Energy: Government Policy ; Environmental Economics: Government Policy ; Computable and Other Applied General Equilibrium Models ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
• Subject: Umwelttechnik ; Umweltpolitik ; Umweltstandard ; Ökosteuer ; Overlapping Generations ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rausch, Sebastian ; Yonezawa, Hidemichi
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/273469
• Last update: 10.03.2025, 11:43 AM CET