Can technological progress in renewable energy sustain an age of cheap energy?
AbstractThe fact that harnessing renewable energy depends heavily upon fossil fuels implies that a continuous rise in energy prices is inevitable without technological progress in saving fossil fuel use. Using a simple Hotelling model of optimal nonrenewable resource extraction, this paper explores the conditions under which the continuous price rise of renewable energy is restrained in the presence of technological progress in harnessing renewable energy. In these circumstances, the results show that the growth rate of technology in harnessing renewable energy has to be larger than the discount rate to sustain the age of cheap energy.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 10-16.
Length: 15 pages
Date of creation: May 2010
Date of revision:
renewable energy; fossil fuels; technological progress;
Find related papers by JEL classification:
- Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-ENE-2010-05-22 (Energy Economics)
- NEP-ENV-2010-05-22 (Environmental Economics)
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