TECHNOLOGICAL CHANGE during the ENERGY TRANSITION

Gerard van der Meijden*, Sjak Smulders

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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Abstract

The energy transition from fossil fuels to alternative energy sources has important consequences for technological change and resource extraction. We examine these consequences by incorporating a nonrenewable resource and an alternative energy source in a market economy model of endogenous growth through expanding varieties. During the energy transition, technological progress is nonmonotonic over time: It declines initially, starts increasing when the economy approaches the regime shift, and jumps down once the resource stock is exhausted. A moment of peak-oil does no longer necessarily occur, and simultaneous use of the resource and the alternative energy source will take place if the return to innovation becomes too low. Subsidies to research and development (R&D) and to renewables production speed up the energy transition, whereas a tax on fossil fuels postpones the switch to renewable energy.

Original languageEnglish
Pages (from-to)805-836
Number of pages32
JournalMacroeconomic Dynamics
Volume22
Issue number4
Early online date15 Jun 2018
DOIs
Publication statusPublished - Jun 2018

Keywords

  • Alternative Energy Sources
  • Endogenous Growth
  • Energy Transition
  • Nonrenewable Resources
  • Technological Change

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