IDEAS home Printed from https://ideas.repec.org/p/een/ccepwp/1705.html
   My bibliography  Save this paper

Economic growth and development with low-carbon energy

Author

Listed:
  • Sam Fankhauser

    (Grantham Research Institute on Climate Change and Centre for Climate Change Economics and Policy, London School of Economics)

  • Frank Jotzo

Abstract

Energy is needed for economic growth, and access to cheap, reliable energy is an essential development objective. Historically most incremental energy demand has been met through fossil fuels, however in future that energy will have to be low-carbon and ultimately zero-carbon. Decarbonisation can and needs to happen at varying speeds in all countries, depending on national circumstances. This paper reviews the implications of a transition to low-carbon energy on economic growth and development in current low income countries. It sets out empirical findings about trajectories for energy intensity and emissions intensity of economic growth; explores pathways to accelerate decarbonisation; reviews the theoretical and empirical literature on economic costs and co-benefits of energy decarbonisation; and assesses analytical approaches. It discusses the opportunities that might arise in terms of a cleaner, more dynamic and more sustainable growth model, and the options for developing countries to implement a less carbon intensive model of economic development.

Suggested Citation

  • Sam Fankhauser & Frank Jotzo, 2017. "Economic growth and development with low-carbon energy," CCEP Working Papers 1705, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:ccepwp:1705
    as

    Download full text from publisher

    File URL: https://ccep.crawford.anu.edu.au/files/uploads/ccep_crawford_anu_edu_au/2017-10/fankhauser_jotzo_-_economic_growth_and_development_with_low-carbon_energy_-_ccepwp1705.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alex Bowen & Sam Fankhauser, 2017. "Good practice in low-carbon policy," Chapters, in: Alina Averchenkova & Sam Fankhauser & Michal Nachmany (ed.), Trends in Climate Change Legislation, chapter 7, pages 123-140, Edward Elgar Publishing.
    2. Zsuzsanna Csereklyei, M. d. Mar Rubio-Varas, and David I. Stern, 2016. "Energy and Economic Growth: The Stylized Facts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    3. James B. Bushnell & Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel, 2017. "Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 57-90, May.
    4. Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
    5. Bovenberg, A Lans & Goulder, Lawrence H, 1996. "Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses," American Economic Review, American Economic Association, vol. 86(4), pages 985-1000, September.
    6. Ian W.H. Parry & Roberton C. Williams III & Lawrence H. Goulder, 2002. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 25, pages 471-503, Edward Elgar Publishing.
    7. Sam Fankhauser & Alex Bowen & Raphael Calel & Antoine Dechezlepr�tre & David Grover & James Rydge & Misato Sato, 2012. "Who will win the green race? In search of environmental competitiveness and innovation," GRI Working Papers 94, Grantham Research Institute on Climate Change and the Environment.
    8. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-1089, September.
    9. Hallegatte, Stephane & Heal, Geoffrey & Fay, Marianne & Treguer, David, 2011. "From growth to green growth -- a framework," Policy Research Working Paper Series 5872, The World Bank.
    10. Valentine, Scott Victor, 2011. "Emerging symbiosis: Renewable energy and energy security," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4572-4578.
    11. Samuel Fankhauser, 2013. "A practitioner's guide to a low-carbon economy: lessons from the UK," Climate Policy, Taylor & Francis Journals, vol. 13(3), pages 345-362, May.
    12. Vivian Scott & Stuart Gilfillan & Nils Markusson & Hannah Chalmers & R. Stuart Haszeldine, 2013. "Last chance for carbon capture and storage," Nature Climate Change, Nature, vol. 3(2), pages 105-111, February.
    13. Stefan Dercon, 2014. "Is Green Growth Good for the Poor?," The World Bank Research Observer, World Bank, vol. 29(2), pages 163-185.
    14. John P. Weyant, Francisco C. de la Chesnaye, and Geoff J. Blanford, 2006. "Overview of EMF-21: Multigas Mitigation and Climate Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-32.
    15. Holtz-Eakin, Douglas & Selden, Thomas M., 1995. "Stoking the fires? CO2 emissions and economic growth," Journal of Public Economics, Elsevier, vol. 57(1), pages 85-101, May.
    16. Christophe McGlade & Paul Ekins, 2015. "The geographical distribution of fossil fuels unused when limiting global warming to 2 °C," Nature, Nature, vol. 517(7533), pages 187-190, January.
    17. Antoine Dechezleprêtre & Ralf Martin & Myra Mohnen, "undated". "Knowledge spillovers from clean and dirty technologies: a patent citation analysis," SIMPATIC Working Papers 954, Bruegel.
    18. Bovenberg, A.L. & Goulder, L.H., 1996. "Optimal environmental taxation in the presence of other taxes : General equilibrium analyses," Other publications TiSEM 5d4b7517-c5c8-4ef6-ab76-3, Tilburg University, School of Economics and Management.
    19. Kenneth Gillingham & David Rapson & Gernot Wagner, 2016. "The Rebound Effect and Energy Efficiency Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 68-88.
    20. Kenneth Gillingham & Matthew J. Kotchen & David S. Rapson & Gernot Wagner, 2013. "The rebound effect is overplayed," Nature, Nature, vol. 493(7433), pages 475-476, January.
    21. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 3-28, Winter.
    22. Fei Teng & Frank Jotzo, 2014. "Reaping the Economic Benefits of Decarbonization for China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(5), pages 37-54, September.
    23. Elmar Kriegler & John Weyant & Geoffrey Blanford & Volker Krey & Leon Clarke & Jae Edmonds & Allen Fawcett & Gunnar Luderer & Keywan Riahi & Richard Richels & Steven Rose & Massimo Tavoni & Detlef Vuu, 2014. "The role of technology for achieving climate policy objectives: overview of the EMF 27 study on global technology and climate policy strategies," Climatic Change, Springer, vol. 123(3), pages 353-367, April.
    24. Spalding-Fecher, Randall & Clark, Alix & Davis, Mark & Simmonds, Gillian, 2002. "The economics of energy efficiency for the poor—a South African case study," Energy, Elsevier, vol. 27(12), pages 1099-1117.
    25. Rausch, Sebastian & Metcalf, Gilbert E. & Reilly, John M., 2011. "Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households," Energy Economics, Elsevier, vol. 33(S1), pages 20-33.
    26. Edward B. Barbier, 2010. "Green Stimulus, Green Recovery and Global Imbalances," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 11(2), pages 149-177, April.
    27. Martin L. Weitzman, 2014. "Fat Tails and the Social Cost of Carbon," American Economic Review, American Economic Association, vol. 104(5), pages 544-546, May.
    28. Holden, Steinar, 2013. "Avoiding the resource curse the case Norway," Energy Policy, Elsevier, vol. 63(C), pages 870-876.
    29. Roger Fouquet & Peter J. G. Pearson, 1998. "A Thousand Years of Energy Use in the United Kingdom," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-41.
    30. Geoffrey Blanford & Elmar Kriegler & Massimo Tavoni, 2014. "Harmonization vs. fragmentation: overview of climate policy scenarios in EMF27," Climatic Change, Springer, vol. 123(3), pages 383-396, April.
    31. Global Energy Assessment Writing Team,, 2012. "Global Energy Assessment," Cambridge Books, Cambridge University Press, number 9780521182935, September.
    32. Ekins, Paul & Pollitt, Hector & Summerton, Philip & Chewpreecha, Unnada, 2012. "Increasing carbon and material productivity through environmental tax reform," Energy Policy, Elsevier, vol. 42(C), pages 365-376.
    33. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    34. Chris Bataille & Henri Waisman & Michel Colombier & Laura Segafredo & Jim Williams & Frank Jotzo, 2016. "The need for national deep decarbonization pathways for effective climate policy," Climate Policy, Taylor & Francis Journals, vol. 16(sup1), pages 7-26, June.
    35. David I. Stern and Astrid Kander, 2012. "The Role of Energy in the Industrial Revolution and Modern Economic Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    36. Jakob, Michael & Haller, Markus & Marschinski, Robert, 2012. "Will history repeat itself? Economic convergence and convergence in energy use patterns," Energy Economics, Elsevier, vol. 34(1), pages 95-104.
    37. Pfeiffer, Alexander & Millar, Richard & Hepburn, Cameron & Beinhocker, Eric, 2016. "The ‘2°C capital stock’ for electricity generation: Committed cumulative carbon emissions from the electricity generation sector and the transition to a green economy," Applied Energy, Elsevier, vol. 179(C), pages 1395-1408.
    38. Ritchie, Justin & Dowlatabadi, Hadi, 2017. "The 1000 GtC coal question: Are cases of vastly expanded future coal combustion still plausible?," Energy Economics, Elsevier, vol. 65(C), pages 16-31.
    39. Roger Fouquet, 2008. "Heat, Power and Light," Books, Edward Elgar Publishing, number 4061.
    40. Scrieciu, S. Şerban & Barker, Terry & Ackerman, Frank, 2013. "Pushing the boundaries of climate economics: critical issues to consider in climate policy analysis," Ecological Economics, Elsevier, vol. 85(C), pages 155-165.
    41. Ottmar Edenhofer , Brigitte Knopf, Marian Leimbach and Nico Bauer, 2010. "ADAM's Modeling Comparison Project - Intentions and Prospects," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    42. Cochran, Jaquelin & Mai, Trieu & Bazilian, Morgan, 2014. "Meta-analysis of high penetration renewable energy scenarios," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 246-253.
    43. Nicholas Stern, 2016. "Economics: Current climate models are grossly misleading," Nature, Nature, vol. 530(7591), pages 407-409, February.
    44. Sue Wing, Ian, 2006. "Representing induced technological change in models for climate policy analysis," Energy Economics, Elsevier, vol. 28(5-6), pages 539-562, November.
    45. Sinn, Hans-Werner, 2012. "The Green Paradox: A Supply-Side Approach to Global Warming," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016680, April.
    46. Stephane Hallegatte & Mook Bangalore & Laura Bonzanigo & Marianne Fay & Tamaro Kane & Ulf Narloch & Julie Rozenberg & David Treguer & Adrien Vogt-Schilb, 2016. "Shock Waves," World Bank Publications - Books, The World Bank Group, number 22787.
    47. Wei, Max & Patadia, Shana & Kammen, Daniel M., 2010. "Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?," Energy Policy, Elsevier, vol. 38(2), pages 919-931, February.
    48. Aidy Halimanjaya, 2015. "Climate mitigation finance across developing countries: what are the major determinants?," Climate Policy, Taylor & Francis Journals, vol. 15(2), pages 223-252, March.
    49. Carraro, Carlo & Galeotti, Marzio & Gallo, Massimo, 1996. "Environmental taxation and unemployment: Some evidence on the 'double dividend hypothesis' in Europe," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 141-181, October.
    50. Stéphane Hallegatte, 2012. "From Growth to Green Growth," Review of Environment, Energy and Economics - Re3, Fondazione Eni Enrico Mattei, August.
    51. Global Energy Assessment Writing Team,, 2012. "Global Energy Assessment," Cambridge Books, Cambridge University Press, number 9781107005198, September.
    52. Dimitropoulos, John, 2007. "Energy productivity improvements and the rebound effect: An overview of the state of knowledge," Energy Policy, Elsevier, vol. 35(12), pages 6354-6363, December.
    53. Rozenberg, Julie & Vogt-Schilb, Adrien & Hallegatte, Stephane, 2014. "Transition to clean capital, irreversible investment and stranded assets," Policy Research Working Paper Series 6859, The World Bank.
    54. McNeil, Michael A. & Iyer, Maithili & Meyers, Stephen & Letschert, Virginie E. & McMahon, James E., 2008. "Potential benefits from improved energy efficiency of key electrical products: The case of India," Energy Policy, Elsevier, vol. 36(9), pages 3467-3476, September.
    55. Clarke, Leon & Weyant, John & Edmonds, Jae, 2008. "On the sources of technological change: What do the models assume," Energy Economics, Elsevier, vol. 30(2), pages 409-424, March.
    56. Harald Winkler & Randall Spalding-Fecher & Lwazikazi Tyani & Khorommbi Matibe, 2002. "Cost-benefit analysis of energy efficiency in urban low-cost housing," Development Southern Africa, Taylor & Francis Journals, vol. 19(5), pages 593-614.
    57. Baran Doda, 2016. "Tales from the tails: Sector-level carbon intensity distribution," GRI Working Papers 252, Grantham Research Institute on Climate Change and the Environment.
    58. Calvin, Katherine & Clarke, Leon & Krey, Volker & Blanford, Geoffrey & Jiang, Kejun & Kainuma, Mikiko & Kriegler, Elmar & Luderer, Gunnar & Shukla, P.R., 2012. "The role of Asia in mitigating climate change: Results from the Asia modeling exercise," Energy Economics, Elsevier, vol. 34(S3), pages 251-260.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muhammad Shahbaz & Vassilios G. Papavassiliou & Amine Lahiani & David Roubaud, 2023. "Are we moving towards decarbonisation of the global economy? Lessons from the distant past to the present," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2620-2634, July.
    2. Halkos, George & Moll de Alba, Jaime & Todorov, Valentin, 2021. "Analyzing manufacturing sector and selected development challenges: A panel data analysis," Energy, Elsevier, vol. 235(C).
    3. Xuan Yang & Rongrong Li, 2018. "Investigating Low-Carbon City: Empirical Study of Shanghai," Sustainability, MDPI, vol. 10(4), pages 1-14, April.
    4. Lu, Jin & Wang, Tianhui & Liu, Xihua, 2023. "Can environmental governance policy synergy reduce carbon emissions?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 570-585.
    5. Nigel R Curry, 2021. "The rural social economy, community food hubs and the market," Local Economy, London South Bank University, vol. 36(7-8), pages 569-588, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adrien Vogt‐Schilb & Stephane Hallegatte, 2017. "Climate policies and nationally determined contributions: reconciling the needed ambition with the political economy," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 6(6), November.
    2. Gregory Casey, 2024. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 192-228.
    3. Adrien Vogt‐Schilb & Stephane Hallegatte, 2017. "Climate policies and nationally determined contributions: reconciling the needed ambition with the political economy," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 6(6), November.
    4. : Eduardo L. Giménez (a) & Miguel Rodríguez, "undated". "Pigou’S Dividend Versus Ramsey’S Dividend In The Double Dividend Literature," Working Papers 2-06 Classification-JEL :, Instituto de Estudios Fiscales.
    5. Chang, Juin-Jen & Wang, Wei-Neng & Shieh, Jhy-Yuan, 2018. "Environmental rebounds/backfires: Macroeconomic implications for the promotion of environmentally-friendly products," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 35-68.
    6. Burtraw, Dallas & Cannon, Matthew, 2000. "Heterogeneity in Costs and Second-Best Policies for Environmental Protection," RFF Working Paper Series dp-00-20, Resources for the Future.
    7. Mireille Chiroleu-Assouline, 2001. "Le double dividende. Les approches théoriques," Revue Française d'Économie, Programme National Persée, vol. 16(2), pages 119-147.
    8. Saunders, Harry D. & Roy, Joyashree & Azevedo, Inês M.L. & Chakravarty, Debalina & Dasgupta, Shyamasree & De La Rue Du Can, Stephane & Druckman, Angela & Fouquet, Roger & Grubb, Michael & Lin, Boqiang, 2021. "Energy efficiency: what has research delivered in the last 40 years?," LSE Research Online Documents on Economics 114344, London School of Economics and Political Science, LSE Library.
    9. Richard S.J. Tol, 2018. "Energy and Climate," Working Paper Series 1618, Department of Economics, University of Sussex Business School.
    10. Waldemar Marz, 2019. "Complex dimensions of climate policy: the role of political economy, capital markets, and urban form," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 85.
    11. van der Zwaan, Bob & Kober, Tom & Calderon, Silvia & Clarke, Leon & Daenzer, Katie & Kitous, Alban & Labriet, Maryse & Lucena, André F.P. & Octaviano, Claudia & Di Sbroiavacca, Nicolas, 2016. "Energy technology roll-out for climate change mitigation: A multi-model study for Latin America," Energy Economics, Elsevier, vol. 56(C), pages 526-542.
    12. Mealy, Penny & Teytelboym, Alexander, 2017. "Economic Complexity and the Green Economy," INET Oxford Working Papers 2018-03, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, revised Feb 2019.
    13. Dissou, Yazid, 2005. "Cost-effectiveness of the performance standard system to reduce CO2 emissions in Canada: a general equilibrium analysis," Resource and Energy Economics, Elsevier, vol. 27(3), pages 187-207, October.
    14. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "The Effect of Allowance Allocation on the Cost of Carbon Emission Trading," RFF Working Paper Series dp-01-30-, Resources for the Future.
    15. Lawrence H. Goulder & Ian W.H. Parry & Roberton C. Williams III & Dallas Burtraw, 2002. "The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 27, pages 523-554, Edward Elgar Publishing.
    16. Ian W.H. Parry & Antonio M. Bento, 2002. "Tax Deductions, Environmental Policy, and the "Double Dividend" Hypothesis," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 22, pages 397-426, Edward Elgar Publishing.
    17. Fullerton, Don & Ta, Chi L., 2019. "Environmental policy on the back of an envelope: A Cobb-Douglas model is not just a teaching tool," Energy Economics, Elsevier, vol. 84(S1).
    18. Bandyopadhyay, Gopal & Bagheri, Fathollah & Mann, Michael, 2007. "Reduction of fossil fuel emissions in the USA: A holistic approach towards policy formulation," Energy Policy, Elsevier, vol. 35(2), pages 950-965, February.
    19. A. Lans Bovenberg & Lawrence H. Goulder, 2001. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does It Cost?," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 45-90, National Bureau of Economic Research, Inc.
    20. Samuel Fankhauser & Nicholas Stern, 2016. "Climate change, development, poverty and economics," GRI Working Papers 253, Grantham Research Institute on Climate Change and the Environment.

    More about this item

    Keywords

    Economic growth; Developing countries; Decarbonisation; Low-emissions trajectories; Climate change mitigation; Emissions intensity;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:ccepwp:1705. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCEP (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.