Directed technological change and general purpose technologies: Can AI accelerate clean energy innovation?

Spekaer: Dr Marion Dumas, Assistant Professorial Research Fellow, Grantham Research Institute on Climate Change and Environment, London School of Economics and Political Science

In this paper, we ask how the race between clean and dirty technologies is shaped by improvements in general-purpose technologies (GPT) such as information and communication technologies and artificial intelligence. First, using patent data, we document that clean technologies absorb more spillovers from AI and ICT than dirty technologies. Second, we show, in theory, that such differential rate of absorption of a GPT can affect the direction of technological change, and in particular, the competition between clean and dirty technologies. Third, we analyse whether the geographical exposure of energy patenting firms to AI innovations affects the extent to which their innovations absorb AI and whether they redirect their innovations away from dirty and towards clean innovation. We then study the policy implications in a dynamic general equilibrium model with endogenous innovation.

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Cambridge Centre for Environment, Energy and Natural Resource Governance (CEENRG) series