The “advancedness” of knowledge in pollution-saving technological change with a qualitative application to SO2 cap and trade
Working Paper 100
This paper investigates the extent to which ‘advanced’ knowledge and technology is likely to play a role in reducing greenhouse gas (GHG) emission in future by looking at the role that advanced knowledge and technology played in the technological change process that reduced SO2 emissions under the US SO2 cap and trade program. It investigates the hypothesis that advanced knowledge and technology dedicated to pollution abatement played a minor role in that process while pre-existing, relatively unadvanced forms of knowledge and technology played the main role. New qualitative evidence is used to investigate the hypothesis including interviews with electric power plant R&D managers, plant-level compliance data, and the nature of the changes undergone by the boiler manufacturer, coal mining and railroad companies in the plants’ upstream supply chain. The paper finds that advanced knowledge dedicated to pollution abatement like the type now being emphasised for carbon capture and storage (CCS) played a minor role, while unadvanced knowledge and technology, as well as general purpose knowledge repurposed to the pollution problem, played the main role. There are limits to how far these findings can be generalised to the role that knowledge will play in controlling GHG emissions. Nonetheless, one contribution is to point out that at least with respect to reducing pollution emissions, ‘innovation’ in pollution control can be inexpensive and effective without involving universal advance in dedicated pollution control technology.