this is because lowcarbon options nuclear and carbon capture and storage ccs already exist in the electricity sector marginal impacts of rd on energy efficiency are decreasing and learning effects in renewable energies fade even with pricing of ghg emissions and without political uncertainty about the future path of carbon prices the development and diffusion of iowemission technologies would still be less than is socially optimal an important reason for this conclusion is that firms investing in rd are typically unable to appropriate all or most of the social returns they generate owing to the publicgood nature of knowledge much of the social return on rd investments will acciue as spillovers to competing firms downstream firms that purchase the innovating firm s products or to consumers griliches empirical evidence suggests that social rates of return to rd are substantially higher than private rates of return griliches and that consequently rd investment is below the socially optimal level