I reconcile a benchmark model of directed technical change with the historical experience of energy transitions by allowing for a non-unitary elasticity of substitution between machines and the other factor of production, interpreted here as energy resources. I show that the economy becomes increasingly locked-in to the dominant sector when machines and resources are gross substitutes, but a transition from the dominant sector to the other is possible when machines and resources are gross complements. Consistent with history, a transition in research activity leads the transition in resource supply. A calibrated numerical implementation shows that innovation is critical for climate change policy. A policymaker would use a U-shaped emission tax trajectory so as to immediately transition innovation away from the fossil sector, wait for clean technology to improve, and then hasten a transition in resource supply later in the century.
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