The optimal strategies for clean technology to advance green transition

• Published in: The Science of the total environment Vol. 716; p. 134439
• Main Authors: Yang, Yong-cong, Nie, Pu-yan, Huang, Jin-bo
• Format: Journal Article
• Language: English
• Published: Netherlands Elsevier B.V 10.05.2020
• Subjects: Clean technology; Green transition; Subsidies; Green transition; Q2; Q4; O3; Clean technology; L5; Subsidies
• ISSN: 0048-9697; 1879-1026
• DOI: 10.1016/j.scitotenv.2019.134439

[Display omitted] •Carbon taxes stimulate green transition as well as subsidies upon mature technology.•Energy price fluctuation and innovation risk deter the green transition.•The effect of subsidy on the second stage is more significant.•More subsidies should be given in the first stage instead of in the second stage. By establishing a two-stage model, this paper captures the optimal strategies for clean technology to advance green transition upon various scenarios. Based on theoretical analysis, we conclude that carbon taxes could stimulate innovation and green transition as well as subsidies when technology is mature. On the other hand, the effectiveness of carbon taxes decreases with immature technology. Meanwhile, both energy price fluctuation and innovation risk deter the development of clean technology, while the negative effects are much more significant at the second stage than those at the first stage. In addition, subsidies in both periods show much more significant impacts on the second stage than those on the first stage, while firms face more uncertainty and risk in the first stage. To advance green transition efficiently, the optimal incentive strategy is to allocate more subsidies in the first stage instead of in the second stage.