The Influence of Economic Growth, Population, and Fossil Fuel Scarcity on Energy Investments
This paper examines the dynamics of energy investments and clean energy Research and Development (R&D) using a scenario-based modeling approach. Starting from the global scenarios proposed in the RoSE model ensemble experiment, we analyze the dynamics of investments under different assumptions regarding economic and population growth as well as availability of fossil fuel resources, in the absence of a climate policy. Our analysis indicates that economic growth and the speed of income convergence across countries matters for improvements in energy efficiency, both via dedicated R&D investments but mostly through capital-energy substitution. In contrast, fossil fuel prices, by changing the relative competitiveness of energy sources, create an economic opportunity for radical innovation in the energy sector. Indeed, our results suggest that fossil fuel availability is the key driver of investments in low carbon energy innovation. However, this innovation, by itself, is not sufficient to induce emission reductions compatible with climate stabilization objectives.
|Date of creation:||Jun 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Corso Magenta, 63 - 20123 Milan|
Web page: http://www.feem.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blanford, Geoffrey J., 2009. "R&D investment strategy for climate change," Energy Economics, Elsevier, vol. 31(Supplemen), pages S27-S36.
- Valentina Bosetti & Massimo Tavoni, 2007.
"Uncertain R&D, Backstop Technology and GHGs Stabilization,"
2007.6, Fondazione Eni Enrico Mattei.
- Bosetti, Valentina & Tavoni, Massimo, 2009. "Uncertain R&D, backstop technology and GHGs stabilization," Energy Economics, Elsevier, vol. 31(Supplemen), pages S18-S26.
- Edenhofer, Ottmar & Bauer, Nico & Kriegler, Elmar, 2005. "The impact of technological change on climate protection and welfare: Insights from the model MIND," Ecological Economics, Elsevier, vol. 54(2-3), pages 277-292, August.
- Hübler, Michael, 2011. "Technology diffusion under contraction and convergence: A CGE analysis of China," Energy Economics, Elsevier, vol. 33(1), pages 131-142, January.
- Richels, Richard G. & Blanford, Geoffrey J., 2008. "The value of technological advance in decarbonizing the U.S. economy," Energy Economics, Elsevier, vol. 30(6), pages 2930-2946, November.
- David Popp & Richard G. Newell & Adam B. Jaffe, 2009. "Energy, the Environment, and Technological Change," NBER Working Papers 14832, National Bureau of Economic Research, Inc.
- Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999.
"The Induced Innovation Hypothesis and Energy-Saving Technological Change,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 114(3), pages 941-975.
- Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1998. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," NBER Working Papers 6437, National Bureau of Economic Research, Inc.
- Stavins, Robert & Jaffe, Adam & Newell, Richard, 1998. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," Discussion Papers dp-98-12-rev, Resources For the Future.
- Valentina Bosetti & Carlo Carraro & Massimo Tavoni, 2009. "Climate Policy after 2012," CESifo Economic Studies, CESifo, vol. 55(2), pages 235-254, June.
- Hübler, Michael & Baumstark, Lavinia & Leimbach, Marian & Edenhofer, Ottmar & Bauer, Nico, 2012.
"An integrated assessment model with endogenous growth,"
ZEW Discussion Papers
12-054, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Hübler, Michael & Baumstark, Lavinia & Leimbach, Marian & Edenhofer, Ottmar & Bauer, Nico, 2012. "An integrated assessment model with endogenous growth," Ecological Economics, Elsevier, vol. 83(C), pages 118-131.
- Ottmar Edenhofer, Kai Lessmann, Claudia Kemfert, Michael Grubb and Jonathan Kohler , 2006. "Induced Technological Change: Exploring its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the Innovation Modeling Comparison Project," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 57-108.
- Enrica Cian & Valentina Bosetti & Massimo Tavoni, 2012. "Technology innovation and diffusion in “less than ideal” climate policies: An assessment with the WITCH model," Climatic Change, Springer, vol. 114(1), pages 121-143, September.
- David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
- Ang, B. W., 2005. "The LMDI approach to decomposition analysis: a practical guide," Energy Policy, Elsevier, vol. 33(7), pages 867-871, May.
- Leimbach, Marian & Baumstark, Lavinia, 2010. "The impact of capital trade and technological spillovers on climate policies," Ecological Economics, Elsevier, vol. 69(12), pages 2341-2355, October.
When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2013.59. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah)
If references are entirely missing, you can add them using this form.