Energy saving technical progress and optimal capital stock: the role of embodiment

Boucekkine, Raouf; Pommeret, Aude

doi:10.1016/s0264-9993(03)00039-7

Cited by 28 publications

(35 citation statements)

References 17 publications

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“…For example, the World Energy Outlook [32] writes that fossil fuels represent nearly 80 percent of world primary energy consumption. Add to this another 7% from the possibly limited 5 nuclear sector, another approximately 9% from an unsustainable 5 Some research suggests that too few uranium resources exist to meet demand in the future (IAEA [26]). 6 use of traditional biomass and we quickly arrive at a number which is only marginally different from 100%.…”

Section: Empirical Motivationsmentioning

confidence: 99%

Learning-by-doing and the costs of a backstop for energy transition and sustainability

Jouvet

Schumacher

2012

Ecological Economics

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We assess the impact of being able to substitute an unlimited but costly energy substitute (like wind, solar) for a non-renewable resource (like oil, coal) in a model of sustainable growth. The prospects for sustainability on the optimal path depend crucially on the costs of this substitute.Furthermore, the poorer a country, measured in terms of capital stock at a given point in time, the later it should switch to the renewable substitute, and the more likely it will be unsustainable. Taking learning-by-doing in account, we find that this leads to an earlier switching time but does not guarantee sustainability.JEL Classification: Q21, Q32, Q42, Q56. Key words: backstop technology; non-renewable resource; resource substitution; sustainability; learning-by-doing. * EconomiX, University of Paris Ouest and Climate Economics Chair, e-mail: pjouvet@u-paris10.fr. † Banque centrale du Luxembourg, 2, boulevard Royal, L-2983 Luxembourg, Luxembourg, email: ingmar.schumacher@bcl.lu. We are grateful to Katheline Schubert for discussions and thank two anonymous referees as well as the editor for their comments. The views and opinions expressed here do not necessarily reflect those of the Banque centrale du Luxembourg.

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Section: Empirical Motivationsmentioning

confidence: 99%

Learning-by-doing and the costs of a backstop for energy transition and sustainability

Jouvet

Schumacher

2012

Ecological Economics

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“…Optimal capital replacement in the presence of technological change, often referred to as vintage capital models (VCMs), has been analyzed extensively in the economic literature (Solow et al, 1966;Malcolmson, 1975;Benhabib and Rustichini, 1991;Yatsenko, 1996, 2005;Boucekkine et al, 1997Boucekkine and Pommeret, 2004;Greenwood et al, 1997Greenwood et al, , 2000. Most of the VCMs control the investment in new capital and the optimal scrapping time of obsolete capital (creative destruction).…”

Section: Review Of the Literaturementioning

confidence: 99%

“…If I(t, a) ¼ 0, then only the new machines are purchased and Eqs. (1)-(3) can be presented in the integral form that has been studied in Solow et al (1966), Malcolmson (1975), Hritonenko and Yatsenko (1996, 2005, Boucekkine et al (1997, and Boucekkine and Pommeret (2004). This paper extends the economic and mathematical analysis of the optimization problem (OP) originally stated and studied in Feichtinger et al (2003Feichtinger et al ( , 2006 Here, e Àrt is the discounting factor, p(t) denotes the price of the produced good, f(tÀa)v(a) is the output in year t by a machine of age a, and q(t, a) is the specific unit maintenance and operating costs per machine of age a.…”

Section: The Economic Modelmentioning

confidence: 99%

“…In some cases, the capital unit price decreases. For instance, Boucekkine and Pommeret (2004) report that the productivity increase in the IT sector of the US economy was around 42% per year between 1995 and 1999, while the price of new vintages decreased by 24% during the same period. In contrast to the distributed VCM of Feichtinger et al (2003Feichtinger et al ( , 2006, where prices are constant, the model presented in this paper takes into account the evolution of price of a final product and new or not-new capital.…”

Section: Dynamics Of Technological Change and Learningmentioning

confidence: 99%

“…Moreover, all major advances in solving the OPs with state restrictions have been achieved by switching to integral equations (Ioffe and Tikhomirov, 1979;Warga, 1972;Neustadt, 1976;Milyutin and Osmolovskii, 1998, etc.). Similarly, the VCMs of Solow et al (1966), Malcolmson (1975), Hritonenko and Yatsenko (1996), Boucekkine et al (1997), Boucekkine and Pommeret (2004), Greenwood et al (1997), and Mulder et al (2003) are all based on integral equations. In this paper, we extend the Brokate (1985) technique to the case with state constraints (and local dynamics).…”

Section: Positiveness Of Capital Stock and Creative Destructionmentioning

confidence: 99%

See 2 more Smart Citations

The optimal economic lifetime of vintage capital in the presence of operating costs, technological progress, and learning

Goetz

Hritonenko

Yatsenko

2008

Journal of Economic Dynamics and Control

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Energy Transition Under Irreversibility: A Two-Sector Approach

Dato¹

2016

Environ Resource Econ

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In this paper, we analyze the optimal energy transition of a two-sector economy (energy and final goods) with exhaustible oil reserves, a renewable source of energy and a pollution threat. The latter corresponds to a pollution threshold above which a part of the capital is lost (following flooding for instance). We show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources, then crosses the pollution threshold and therefore loses a part of its capital. At the end, the sole adoption of the renewable energy is optimal only in the long run. This result is in line with the asymptotic energy transition arguments stating that the transition to "clean" energy may happen only in the long run. We also show that economy reduces the use of energy resource as long as the productivity of capital and energy services is high. Therefore, public policies should promote investments in energy innovation that targets productive sector, home appliances and buildings and helps to save both money and energy. We extend the present model to allow for additional investment in energy saving technologies. Our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society. For policy implications, economic instruments such as taxes on "dirty" energy, subsidies on "clean" energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition. This is particularly important for developing countries that mostly rely on polluting energy resources and are the most vulnerable to climate change. But those economic instruments should be carefully designed in line with the asymptotic energy transition result.

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Energy saving technical progress and optimal capital stock: the role of embodiment

Cited by 28 publications

References 17 publications

Learning-by-doing and the costs of a backstop for energy transition and sustainability

Learning-by-doing and the costs of a backstop for energy transition and sustainability

The optimal economic lifetime of vintage capital in the presence of operating costs, technological progress, and learning

Energy Transition Under Irreversibility: A Two-Sector Approach

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