Access to finance is a major barrier to clean innovation. We incorporate heterogeneous and endogenous financing costs in a directed technical change model and identify optimal climate mitigation policies. The presence of a financing experience effect pushes the policymaker to strengthen policies...

An integrated assessment model with endogenous technology is described. Optimal policy involves a clean transition using both carbon tax and clean research subsidy instruments. The paper explores each instrument’s relative performance when acting alone, helping to explain different outcomes in...

A review of the literature indicates a decreasing long-run elasticity of substitution between clean and dirty inputs as the share of clean inputs rises. In the power sector, which is the largest contributor to greenhouse gas emissions, integrating intermittent clean energy supply becomes...