ABSTRACT
There is a large literature showing that international environmental agreements focusing only on reducing emissions, such as the Kyoto Protocol on climate change, cannot be expected to achieve much (for example, Barrett 1994; Finus 2003). One alternative to such a comprehensive international environmental agreement is to focus instead on technological improvements in order to reduce abatement costs. A sufficiently large reduction in abatement costs might induce countries to undertake significant emission reductions. Even without an explicit general agreement on emission reductions, some agreement leading to lower abatement costs as a consequence of the R&D agreed upon might result in a broad reduction of emissions. This is the background for proposals of a climate agreement on technology development (for example, Barrett 2006; Hoel and de Zeeuw 2010). The present chapter discusses this issue in more detail, emphasizing the fact that countries differ with respect to their valuation (or willingness to pay) for reducing greenhouse gas emissions.
