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The Influence of Economic Growth, Population, and Fossil Fuel Scarcity on Energy Investments

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  • De Cian, Enrica
  • Fabio, Sferra
  • Tavoni, Massimo

Abstract

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.

Suggested Citation

  • De Cian, Enrica & Fabio, Sferra & Tavoni, Massimo, 2013. "The Influence of Economic Growth, Population, and Fossil Fuel Scarcity on Energy Investments," Climate Change and Sustainable Development 156485, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:156485
    DOI: 10.22004/ag.econ.156485
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    Cited by:

    1. Orecchia, Carlo & Parrado, Ramiro, 2013. "A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS," Climate Change and Sustainable Development 162416, Fondazione Eni Enrico Mattei (FEEM).
    2. Elmar Kriegler & Ioanna Mouratiadou & Gunnar Luderer & Jae Edmonds & Ottmar Edenhofer, 2016. "Introduction to the RoSE special issue on the impact of economic growth and fossil fuel availability on climate protection," Climatic Change, Springer, vol. 136(1), pages 1-6, May.
    3. Khellaf, Ayache & Nihou, Abdelaziz & Baray, Abdoul G. & van der Mensbrugghe, Dominique & Liverani, Andrea & Tyner, Wallace E., 2014. "Socioeconomic impacts of green energy growth policy in Morocco - a general equilibrium analysis," Conference papers 332493, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Kantamneni, Abhilash & Winkler, Richelle & Gauchia, Lucia & Pearce, Joshua M., 2016. "Emerging economic viability of grid defection in a northern climate using solar hybrid systems," Energy Policy, Elsevier, vol. 95(C), pages 378-389.
    5. Wang, Heming & Wang, Guoqiang & Qi, Jianchuan & Schandl, Heinz & Li, Yumeng & Feng, Cuiyang & Yang, Xuechun & Wang, Yao & Wang, Xinzhe & Liang, Sai, 2020. "Scarcity-weighted fossil fuel footprint of China at the provincial level," Applied Energy, Elsevier, vol. 258(C).

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    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • 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
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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