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The Role of Sustainable Investment in Climate Policy

Global Climate Forum, 10178 Berlin, Germany
Faculty of Economics and Social Sciences, University of Potsdam, 14469 Potsdam, Germany
State Key Laboratory of Earth Surface Processes and Resource Ecology, Beijing Normal University, Beijing 100875, China
School of Sustainability, Arizona State University, Tempe, AZ 85287, USA
Author to whom correspondence should be addressed.
Sustainability 2017, 9(12), 2221;
Received: 25 October 2017 / Revised: 25 November 2017 / Accepted: 26 November 2017 / Published: 1 December 2017
(This article belongs to the Section Economic and Business Aspects of Sustainability)
Reaching the Sustainable Development Goals requires a fundamental socio-economic transformation accompanied by substantial investment in low-carbon infrastructure. Such a sustainability transition represents a non-marginal change, driven by behavioral factors and systemic interactions. However, typical economic models used to assess a sustainability transition focus on marginal changes around a local optimum, which—by construction—lead to negative effects. Thus, these models do not allow evaluating a sustainability transition that might have substantial positive effects. This paper examines which mechanisms need to be included in a standard computable general equilibrium model to overcome these limitations and to give a more comprehensive view of the effects of climate change mitigation. Simulation results show that, given an ambitious greenhouse gas emission constraint and a price of carbon, positive economic effects are possible if (1) technical progress results (partly) endogenously from the model and (2) a policy intervention triggering an increase of investment is introduced. Additionally, if (3) the investment behavior of firms is influenced by their sales expectations, the effects are amplified. The results provide suggestions for policy-makers, because the outcome indicates that investment-oriented climate policies can lead to more desirable outcomes in economic, social and environmental terms. View Full-Text
Keywords: climate policy; green growth; macroeconomic models; sustainable investment; technical progress; expectations; 1.5 °C climate policy; green growth; macroeconomic models; sustainable investment; technical progress; expectations; 1.5 °C
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MDPI and ACS Style

Schütze, F.; Fürst, S.; Mielke, J.; Steudle, G.A.; Wolf, S.; Jaeger, C.C. The Role of Sustainable Investment in Climate Policy. Sustainability 2017, 9, 2221.

AMA Style

Schütze F, Fürst S, Mielke J, Steudle GA, Wolf S, Jaeger CC. The Role of Sustainable Investment in Climate Policy. Sustainability. 2017; 9(12):2221.

Chicago/Turabian Style

Schütze, Franziska, Steffen Fürst, Jahel Mielke, Gesine A. Steudle, Sarah Wolf, and Carlo C. Jaeger. 2017. "The Role of Sustainable Investment in Climate Policy" Sustainability 9, no. 12: 2221.

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