• Energy Research
• 2021-2025close
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In the race to achieve climate goals, many governments and organizations are encouraging the local development of Renewable Energy Technology (RET). The spatial innovation dynamics of the development of a technology partly depends on the characteristics of the knowledge base on which this technology builds, in particular the analyticity and cumulativeness of knowledge. Theoretically, greater analyticity and lesser cumulativeness are positively associated with more widespread development. In this study, we first empirically evaluate these relations for general technology and then systematically determine the knowledge base characteristics for a set of 14 different RETs. We find that, while several RETs (photovoltaics, fuel-cells, energy storage) have a highly analytic knowledge base and develop more widespread, there are also important RETs (wind turbines, solar thermal, geothermal and hydro energy) for which the knowledge base is less analytic and which develop less widespread. Likewise, the technological cumulativeness tends to be lower for the former than for the latter group. This calls for regional and country-level policies to be specific for different RETs, taking for a given RET into account both the type of knowledge it builds on as well as the local presence of this knowledge.

In the race to achieve climate goals, many governments and organizations are encouraging the local development of Renewable Energy Technology (RET). The spatial innovation dynamics of the development of a technology partly depends on the characteristics of the knowledge base on which this technology builds, in particular the analyticity and cumulativeness of knowledge. Theoretically, greater analyticity and lesser cumulativeness are positively associated with more widespread development. In this study, we first empirically evaluate these relations for general technology and then systematically determine the knowledge base characteristics for a set of 14 different RETs. We find that, while several RETs (photovoltaics, fuel-cells, energy storage) have a highly analytic knowledge base and develop more widespread, there are also important RETs (wind turbines, solar thermal, geothermal and hydro energy) for which the knowledge base is less analytic and which develop less widespread. Likewise, the technological cumulativeness tends to be lower for the former than for the latter group. This calls for regional and country-level policies to be specific for different RETs, taking for a given RET into account both the type of knowledge it builds on as well as the local presence of this knowledge.

A price on emissions can be achieved through an emission tax or permit trading. The advan- tages and drawbacks of either instrument are debated. We present an agent-based model to compare their performance under bounded rationality and dynamic markets. It describes firms that face uncertainty about future demand and prices; use heuristic rules to decide production levels, trading prices, and technology adoption; and are heterogeneous in terms of production factors, abatement costs, and trading behavior. Using multiple evaluation criteria and a wide range of parameter values, we find that the main difference between the two policies lies in the fact that permit prices fall after successful abatement. This can lead to higher production levels under permit trading, but can also drive emission-efficient firms out of the market. Scarcity rents under permit trading can further create higher profit rates for firms, the extent of which is shown to depend on the mechanisms for market-clearing and initial allocation.

A price on emissions can be achieved through an emission tax or permit trading. The advan- tages and drawbacks of either instrument are debated. We present an agent-based model to compare their performance under bounded rationality and dynamic markets. It describes firms that face uncertainty about future demand and prices; use heuristic rules to decide production levels, trading prices, and technology adoption; and are heterogeneous in terms of production factors, abatement costs, and trading behavior. Using multiple evaluation criteria and a wide range of parameter values, we find that the main difference between the two policies lies in the fact that permit prices fall after successful abatement. This can lead to higher production levels under permit trading, but can also drive emission-efficient firms out of the market. Scarcity rents under permit trading can further create higher profit rates for firms, the extent of which is shown to depend on the mechanisms for market-clearing and initial allocation.