Keywords: Climate Policy, Energy R&D, Investments, Stabilization Costs, Carbon Price
Stabilizing the atmospheric concentrations of greenhouse gases (GHG) at levels expected to prevent dangerous climate changes has become an important, long term global objective. It is therefore crucial to identify a cost-effective way to achieve this objective. In this paper, we analyze investment strategies and climate policies that stabilize CO2 concentrations at 450 ppm. We provide a description of the ideal combination of technical progress and alternative energy investment paths to achieve the sought stabilization targets. Our results emphasize the drastic change in the energy mix that will be necessary to control climate change, the huge investments in existing and new technologies implied, and the crucial role of breakthrough technological innovation.