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Long-term endogenous economic growth and energy transitions

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journal contribution
posted on 2023-06-09, 15:02 authored by Victor Court, Pierre-André Jouvet, Frédéric Lantz
This article builds a bridge between the endogenous economic growth theory, the biophysical economics perspective, and the past and future transitions between renewable and nonrenewable energy forms that economies have had to and will have to accomplish. We provide an endogenous economic growth model subject to the physical limits of the real world, meaning that nonrenewable and renewable energy production costs have functional forms that respect physical constraints, and that technological level is precisely defined as the efficiency of primary-to-useful exergy conversion. The model supports the evidence that historical productions of renewable and nonrenewable energy have greatly influenced past economic growth. Indeed, from an initial almost-renewable-only supply regime we reproduce the increasing reliance on nonrenewable energy that has allowed the global economy to leave the state of economic stagnation that had characterized the largest part of its history. We then study the inevitable transition towards complete renewable energy that human will have to deal with in a not-too-far future since nonrenewable energy comes by definition from a finite stock. Through simulation we study in which circumstances this transition could have negative impacts on economic growth (peak followed by degrowth phase). We show that the implementation of a carbon price can partially smooth such unfortunate dynamics, depending on the ways of use of the income generated by the carbon pricing.

History

Publication status

  • Published

File Version

  • Published version

Journal

Energy Journal

ISSN

0195-6574

Publisher

International Association for Energy Economics

Issue

1

Volume

39

Page range

29-57

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-09-12

First Open Access (FOA) Date

2020-12-15

First Compliant Deposit (FCD) Date

2018-09-12

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