the producers of cleaner energy would be able to enter the market and
compete.
Public Support for Technology
The second element of an effective climate-change policy is public
support for the development of non-emitting technologies. We just
argued that placing a price on GHG emissions would produce incentives
for firms and consumers to switch from carbon-based energy systems to
cleaner, non-emitting systems. But the amount of adoption of non-
emitting technologies will depend crucially on the relevant elasticities of
supply. Especially in the short run, however, these supplies are likely to
be quite inelastic (unresponsive to price increases), and so even a
substantial price on emissions may have only a modest effect on the
development and adoption of non-emitting technologies.
A direct boost to the adoption of these cleaner technologies can be
provided with carefully designed government policies to fund research.
The government could even go so far as to sponsor a “technology race,”
not unlike the “space race” that the United States government entered in
the late 1950s. In this case, the race would be to develop technologies
that could increase the scale of alternative energy sources and overcome
some of their existing technical challenges, and develop cost-effective
methods of capturing and safely storing greenhouse gases.
Canadian Climate-Change Policy