Purpose of this paper is the self-contained description of the green technology

extension of the macroeconomic agent-based model Eurace@unibi. The

original model is extended in mainly five dimensions: (1) There are two types

of production technology, i.e. a green and a conventional. Technology is

embodied in capital goods and in the technological capabilities of firms. (2)

Employees are endowed with two types of evolving technology-specific skills

that are needed to work effectively with specific capital goods. (3) Based on

their technological capabilities and the market environment, consumption

goods (CG) firms decide whether to invest in green or conventional capital.

(4) An environmental accounting keeps track of the environmental impact of

CG sector. (5) A policy module allows to investigate the impact of different

diffusion policies. Main research areas covered by the model extension are

directed technological change, innovation diffusion and technology substitution

processes. A key feature of the model is endogenous, technology-specific

absorptive capacity of heterogeneous technology adopters that evolves through

learning. It is a comprehensive, macroeconomic model that allows to study

the macroeconomic and distributional consequences of transition processes.

The technical description of the model is complemented by a short summary

and discussion of technology transition dynamics in a baseline simulation.