If I follow the general idea in this paper, it is that some government policy intervention, whether through taxes or direct R&D spending, is necessary to get green technological improvement to a rate that would be best for society.

Directed Technological Change in a Post-Keynesian Ecological Macromodel

Abstract: This paper presents a post-Keynesian ecological macromodel, which is stock-flow consistent, and incorporates directed technological change. Private and public R&D spending across three competing, yet complementary inputs – Labor, Capital, and Resources – follow a portfolio allocation decision, where inputs with relatively higher growth in costs, see higher R&D investment and productivity gains. Two policy experiments are reported; a market-based Resource tax increase, and a centralized green policy, where public R&D budget is shifted towards Resource-saving technologies. We highlight that in the presence of labor market institutions, which give rise to hysteresis, and limited R&D budgets, a policy of continuous Resource tax growth is needed to induce Resource-saving technological change to achieve a greener economy. This needs to be coupled with planned government spending adjustment to spur demand and boost investment. The findings also suggest that a mix of market-based and centralized policies may be optimal.

I had to look up the term “post-Keynesian”, and I’m still confused after reading the Wikipedia entry. Basically, these are people trying to carry on and build on Keynes’s original work. They emphasize the importance of long term aggregate demand on growth and employment, and the importance of money and interest rates in this system.