By Michael Lenox and Erika Herz
“Follow the yellow brick road”. So Dorothy is told in the classic 1939 movie, The Wizard of Oz. Alas, if the world’s economies only had such a clear and singular path to follow subsequent to the recent promising Paris Climate Accord.
While the accord has raised hopes that government leaders are serious about reversing climate change, in reality, the path forward is probably more like a vast river with multiple tributaries that merge before powering toward the sea. To significantly reduce our carbon footprint, innovation is required on a massive scale from critical sectors of the economy: energy, transportation and agriculture, just to name a few. Such innovation will not just magically manifest itself. It requires numerous tributaries, including federal and state policy and actions by both public and private actors, leading to a carbon-reduced future. It requires the creation and adoption of a comprehensive technology and innovation policy.
Innovation often arises out of a combination of demand pull (from consumers or businesses) and technology push (think of the new product you never thought you needed until you saw the ad). While pricing carbon is one way of creating a demand pull, it is not the only way.
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