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Clean growth

Given that the threat of human induced climate change is considered the greatest challenge of our time, economic growth has to be sustainable.

We examine the determinants of the main culprit in climate change: greenhouse gas emissions (GHG). Our focus is businesses, responsible for about one-third of GHG emissions in industrialised countries. We find that management practices account for a considerable amount of the variation in emissions found, even in similar business sectors. The programme has carried out evaluations of emissions-reduction schemes such as the European Emissions Trading Scheme and the Climate Change Levy as well as considering impacts on competitiveness and economic performance, a major issue for policy makers.

Businesses are not only polluters but can be innovators in the development of new emission-reducing products, services and processes. An important focus of our research is the drivers of clean innovation (including taxation of dirty innovation) and how policy can efficiently incentivise it. Research using patent citations data suggests that knowledge spillovers from clean innovation exceed those from dirty (carbon-based) innovation. This suggests that short-run as well as longer-run growth effects would occur from a transition to cleaner technologies and climate change policies.

Turning from producers to consumers of energy, we are conducting random controlled trials to see which behavioural incentives and technology (eg smart meters) work to reduce domestic energy consumption or shift its demand to match the natural variations of renewable resources such as solar or wind.

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