The Optimal Climate Policy Portfolio when Knowledge Spills across Sectors
CESifo, Munich, 2010
CESifo Working Paper No. 2988
![](https://cesifo.org/DocImg/cesifo1_wp2988.jpg?c=1689236929)
This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy sector, we show that the combination between environmental and knowledge externalities provides a strong rationale for implementing a portfolio of policies for both emissions reduction and the internalisation of knowledge externalities. Moreover, we show that implementing technology policy as a substitute for stabilisation policy is likely to increase global emissions.