Can technological progress in renewable energy sustain an age of cheap energy?
The 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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|Date of creation:||May 2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.econ.osaka-u.ac.jp/|
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