Economic theory suggests a tax on carbon emissions is the most efficient way to reduce them. But another important effect of such a tax would be to induce innovation in clean energy technology. The energy industry would raise its clean energy R&D spending and accelerate the introduction of new products and processes, and more companies would enter the industry. Yet, this induced innovation effect is overlooked in most modeling, leading to significant underestimation of the impact of a carbon tax.
Please join ITIF for an expert panel discussion on this important issue. ITIF Senior Fellow Joe Kennedy, author of the recent report “How Induced Innovation Lowers the Cost of a Carbon Tax” (published with generous support from the Alliance for Market Solutions), will present his research findings.