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Converting Primary Resources Into Useful Energy: The Pollution Ceiling Efficiency Paradox

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  • Amigues, Jean-Pierre
  • Moreaux, Michel

Abstract

We study an economy producing energy services from a polluting fossil fuel and a carbon free renewable resource under a constraint on the admissible atmospheric carbon concentration, equivalently under a constraint on the admissible temperature. The transformation rates of natural primary resources energy into useful energy are costly endogenous variables. Choosing higher efficiency rates requires to bring into operation more sophisticated energy transformation devices, that is more costly ones. We show that, independently of technical progress, along a perfect foresight equilibrium path which is Pareto optimal, the transformation rate of any exploited resource should increase throughout time, excepted within the period during which the carbon constraint is binding, a phenomenon we call the ’ceiling paradox’.

Suggested Citation

  • Amigues, Jean-Pierre & Moreaux, Michel, 2016. "Converting Primary Resources Into Useful Energy: The Pollution Ceiling Efficiency Paradox," TSE Working Papers 16-624, Toulouse School of Economics (TSE), revised Dec 2018.
    • Handle: RePEc:tse:wpaper:30209
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    More about this item

    Keywords

    energy efficiency; carbon pollution; non-renewable resources; renewable resources;
    All these keywords.

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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