In this document, the OECD expands its analysis in two important domains: first, it focuses on the role of technological innovation in bringing down the costs of climate change mitigation over time. It argues that a concerted research and development effort can indeed be expected to yield important benefits, but not by itself. The pricing of GHG emissions is critical for ensuring that new technologies, once developed, are rapidly deployed where they are most needed. The second new element is an analysis of carbon leakage: that is, the concern that GHG-intensive industries located in countries that take action will lose competitiveness vis-