Emission Trading and the Role of Learning-By-Doing Spillovers in the Bottom-Up Energy-System ERIS Model

In this paper, using the "bottom-up" energy-system optimisation ERIS model, we examine the effects of emission trading on technology deployment, emphasising the role of technology learning spillovers. That is, the possibility that the learning accumulated in a particular technology in a given region may spill to other regions as well, leading to cost reductions there also. The effects of different configurations of interregional spillovers of learning in ERIS and the impact of the emission trading mechanism under those different circumstances are analysed. Including spatial spillovers of learning allows capturing the possibility that the imposition of greenhouse gas emission constraints in a given region may induce technological change in other regions, such as developing countries, even if the latter regions do not face emission constraints. Our stylised results point out the potential benefits of sound international cooperation between industrialised and developing regions on research, development, demonstration and deployment (RD3) of clean energy technologies and on the implementation of emission trading schemes