The economics of climate change and the change of climate in economics

Economics is an unavoidable decision-making tool in the field of climate policy. At the same time, traditional economics is being challenged both empirically and theoretically by scholars in different fields. Its non-neutrality in dealing with climate-related issues—which is illustrated by the controversy over the “no-regret potential”—would thus call for an opening of economics to insights from other disciplines. Within that context, we show that an evolutionary-inspired line of thought coupled with a systemic and historical perspective of technological change provides a very insightful alternative to traditional economics. More particularly, it follows from that framework that the picture of the climate challenge ahead looks very different from what traditional economic analyses would suggest. For instance, the lock-in process makes it unlikely that traditional cost-efficient measures (such as carbon taxation or tradable emission rights) will be sufficient to bring about the required radical changes in the field of energy as they fail to address structural barriers highlighted in our approach.