Technological Transfers in Global Climate Policy — A Strategic Perspective

Pioneering activities in climate policy through increased abatement efforts or financial transfers are costly but often not very successful. In this chapter, we show that leading behavior by a coalition of countries, which is instead based on green technological innovations by members of the coalition and a subsequent costless transfer of the improved technology to other countries, may provide a sensible approach for combatting global warming through unilateral action. In particular, we examine in an otherwise standard model of private public good supply how the effects of such a policy on total greenhouse gas mitigation and welfare of countries depend on the level of research and development (R&D) costs, the intensity and scope of technological spillovers, the size of the technological coalition and the number of countries outside the coalition. In particular, it is shown that such technological transfers, which can be considered as an instrument of “climate finance” in a broader sense, may be required to induce in the strategic context of global public good provision R&Dactivities and thus leading to the formation of a technological coalition.