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Exploring Energy Technology Substitution for Reducing Atmospheric Carbon Emissions

This paper presents a simple method for incorporating the time required for new technology to penetrate the market and subsequently substitute for an old one when evaluating the ability of new energy technology to impact global climate change. The methodology is applied to the two largest sources of energyrelated carbon dioxide: electricity generation and motor vehicles. Carbon-free road transportation is hypothesized to substitute for petroleum-fueled vehicles and carbon-free electric power generation for fossil-fueled electricity based on empirical analogs for substitution dynamics parameters, beginning in the year 2000. The examples imply that near-term significant reductions to 1990 carbon emissions levels via technology substitution are unlikely. The time scale relevant for realizing reductions in carbon emissions is several times the expected lifetime of the products that new technology is intended to replace.

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Energy Specializations: Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Environment – Policy and Regulation

JEL Codes:
Q54 - Climate; Natural Disasters and Their Management; Global Warming
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Energy efficiency, Demand-side management (DSM), electricity demand, climate change, technology change

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No2-5

Published in Volume20, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.