A multi-actor dynamic integrated assessment model (MADIAM) of induced technological change and sustainable economic growth

In the reference 'moderate mitigation' scenario, business investments in energy and carbon efficiency, induced by government CO2 taxes, yield the largest contribution to emissions reduction. Direct government mitigation actions through carbon taxes are more effective with regard to both emission reductions and economic growth if a significant fraction of carbon taxes are recycled into investments in energy and carbon efficiency, i.e. into induced technological change. The influence of consumer preferences, often neglected in integrated assessment analyses, can also be effective in guiding business investments. The chosen examples are intended as illustrations rather than to provide quantitative predictions.