The impact of energy conservation on technology and economic growth

Abstract

We present a model of growth driven by energy use and endogenous factoraugmenting technological change. Both the rate and direction of technological progress are endogenous. The model captures four main stylized facts: total energy use has increased; energy use per hour worked increased slightly; energy efficiency has improved; and the value share of energy in GDP has steadily fallen. We study how energy conservation policies affect growth over time and the long run. Policies that reduce the level of energy use are distinguished from those that reduce the growth rate of energy inputs. Although these policies may stimulate innovation, they unambiguously depress output levels. The former policy has no impact on long-run growth; the latter reduces long-run growth both in the short run and in the long run.JEL codes: O41, Q43

Going beyond energy intensity to understand the energy metabolism of nations: The case of Argentina

“…In order to test the simplest formulation of the EKC hypothesis we graphed the relationship between the indicator of throughput 5 and GDP, and the relationship between energy intensity and GDP per capita. The aim was to verify (or not) the existence of an inverted-U relation.…”

“…The link between energy consumption and economic growth, as well as the relevance of energy flows for economic development, has been widely studied in the economic literature from both theoretical and empirical standpoints [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17]. Understanding this relationship is particularly important from both environmental and socio-economic viewpoints, as energy consumption is crucial to economic development and human environmental impact.…”

Energy, the Environment, and Technological Change

“…A number of studies find this result when endogenous technological change is coupled with the possibility that technological change is undersupplied due to innovation market imperfections (Grubb et al, 2002). In contrast, other studies implicitly or explicitly assume that technological change in the base case is (roughly) optimal; therefore, allowing it to change in response to policy changes may not affect mitigation costs very much (e.g., Goulder and Mathai, 2000;Goulder and Schneider, 1999;Nordhaus, 2002;Smulders and de Nooij, 2003;Sue Wing, 2003). These implicit assumptions about the optimality of technological change in the base case often confound comparisons of the implications of different approaches for endogenizing technological change.…”

“…This simple methodology for endogenizing technological change may be useful to capture important aggregate dynamics, but it does not provide a pathway for relative prices to influence energy-saving or carbon-saving innovation. Smulders and de Nooij (2003) and van Zon and Yetkiner (2003) both build on the endogenous growth literature that includes a continuum of intermediate goods (e.g., Romer, 1990) and apply a variation of this modeling approach to an economy that includes energy as an input to production. In Smulders and de Nooij, endogenous technological change is achieved by improvements in the quality of the continuum of intermediate goods through investment in R&D, while van Zon and Yetkiner achieve endogenous technological change through increases in the variety of the continuum of intermediate goods through R&D investment.…”

International Comparisons of Sectoral Energy- and Labour-Productivity Performance: Stylised Facts and Decomposition of Trends

“…The idea that the nature of technological progress might be factor-augmenting, depending on relative factor prices and substitution possibilities, goes back to Hicks (1932) and received attention in the theoretical and empirical literature on technological change and factor productivity developments ever since (see, for example, Kennedy 1962, Binswanger 1974a,b, Acemoglu 2002, Ruttan 2001. Recently, the issue has also been addressed in the context of environmental policy and energy use, examining a price-or product-standard induced bias towards energy-saving technological change (see, for example, Newell et al 1999, Smulders and de Nooij 2003, Taheri and Stevenson 2002). An important hypothesis in this respect is that if all technological efforts are directed towards an increase in labour productivity, energy productivity improvements might slow down because of lack of resources devoted to increasing energy efficiency − and vice versa.…”