In this paper we develop an economic growth model that includes anthropogenic

climate change. We explicitly include a research sector that creates new technologies

and simultaneously expands productivities of existing technologies. The environment

is affected by R&D activities both negatively, through increase of output

from productivity growth, as well as positively, as new technologies are less harmful

for the environment. We consider three different versions of the model. In the first

version, there are no constraints with respect to research spending, while the R&D

sector affects the rest of the economy. In this version, the environmental damages

are lower than in the model with simple exogenous technical change. Next, we

consider the research dynamics with a constant R&D budget set by the agent. We

find that there exist two different steady states of this economy, one with higher

productivities and less new technologies being developed, and the other with more

technologies being created. In the last version, finally, we allow for dynamic R&D

spending. For this version, it is demonstrated that sustained economic growth with

preservation of the environment is possible given certain conditions as regards the

technology and R&D spending.