Gregory F. Nemet

University of Wisconsin At Madison
La Follette School of Public Affairs

1225 Observatory Drive
Madison, WI
USA
53706
nemet@wisc.edu |  Visit Personal Website


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Professor Nemet's research analyzes the process of technological change in energy and its interactions with public policy. These projects primarily fall in two areas: (1) empirical analysis identifying the drivers of past technological change and (2) modeling the effects of policy instruments on future technological outcomes. The first includes assessment of public policy, research and development (R&D), learning by doing, and knowledge spillovers. An example of the second includes work informing allocation between R&D and demand-side policy instruments to address climate change.

Citation:
Nemet, G. F. (2012). "Subsidies for New Technologies and Knowledge Spillovers from Learning by Doing." Journal of Policy Analysis and Management 31 (3):601-622.
Abstract: This study empirically examines a prominent justification for public subsidies of emerging technologies: that stimulating demand for them provides opportunities for learning by doing. Even if firms learn from their experience, subsidies are still second best to pricing negative externalities if firms can appropriate the benefits of learning. I construct a panel of electricity output from wind power projects, for a case involving $1 billion in public funds, to assess whether firms’ performance benefited from the experience of other firms. I find evidence of learning by doing and knowledge spillovers. However, knowledge gained from experience shows both diminishing returns and depreciating effectiveness.
URL: http://dx.doi.org/10.1002/pam.21643
Citation:
Nemet, G. F. and E. Baker. 2009. "Demand Subsidies Versus {R&D}: Comparing the Uncertain Impacts of Policy on a Pre-commercial Low-carbon Energy Technology." The Energy Journal 30 (4):49-80.
Abstract: We combine an expert elicitation and a bottom-up manufacturing cost model to compare the effects of R&D and demand subsidies. We model their effects on the future costs of a low-carbon energy technology that is not currently commercially available, purely organic photovoltaics (PV). We find that: (1) successful R&D enables PV to achieve a cost target of 4c/kWh, (2) the cost of PV does not reach the target when only subsidies, and not R&D, are implemented, and (3) production-related effects on technological advance-learning-by-doing and economies of scale-are not as critical to the long-term potential for cost reduction in organic PV than is the investment in and success of R&D. These results are insensitive to two levels of policy intensity, the level of a carbon price, the availability of storage technology, and uncertainty in the main parameters used in the model. However, a case can still be made for subsidies: comparisons of stochastic dominance show that subsidies provide a hedge against failure in the R&D program.
Citation:
Nemet, G. F., and A. R. Brandt. Forthcoming, 2012. "Willingness to Pay for a Climate Backstop: Liquid Fuel Producers and Direct CO2 Air Capture." The Energy Journal 33 (1):53--82.
Abstract: We conduct a sensitivity analysis to describe conditions under whichrnliquid fuel producers would fund the development of a climate backstop. We estimatern(1) the cost to develop competitively priced direct CO2 air capture technology,rna possible climate backstop and (2) the effect of this technology on thernvalue of liquid fuel reserves by country and fuel. Under most assumptions, developmentrncosts exceed individual benefits. A particularly robust result is thatrncarbon prices generate large benefits for conventional oil producers?making arnclimate backstop unappealing for them. Unilateral investment does become morernlikely under: stringent carbon policy, social discount rates, improved technicalrnoutcomes, and high price elasticity of demand for liquid fuels. Early stage investmentrnis inexpensive and could provide a hedge against such developments,rnparticularly for fuels on the margin, such as tar sands and gas-to-liquids. Sincernonly a few entities benefit, free riding is not an important disincentive to investment,rnalthough uncertainty about who benefits probably is.
Citation:
Nemet, G. F., and E. Johnson. Forthcoming. "Do Important Inventions Benefit from Knowledge Originating in Other Technological Domains?" Research Policy.
Abstract: A frequently made claim in the innovation literature is that important inventions involve the transfer of new knowledge from one technological domain to another. This study uses U.S. patents granted from 1976 to 2006 to identify the role of knowledge acquired from outside each patent's technological domain. Our results do not seem to support the claim above. Increasing citations to external prior art is a significantly less important predictor of forward citation frequency than citing prior art that is technologically closer. This result is robust across several model specifications and ways of defining whether each flow of knowledge is external. The result is even stronger in the most highly cited technology categories. We discuss possible explanations for this apparently negative impact of external knowledge, including both measurement issues and challenges associated with assimilating disparate knowledge.

Substantive Focus:
Energy and Natural Resource Policy PRIMARY
Environmental Policy SECONDARY
Science and Technology Policy

Theoretical Focus:
Policy Analysis and Evaluation PRIMARY