The impact of energy conservation on technology and economic growth

• Published in: Resource and energy economics Vol. 25; no. 1; pp. 59 - 79
• Main Authors: Smulders, Sjak, de Nooij, Michiel
• Format: Journal Article Conference Proceeding
• Language: English
• Published: Amsterdam Elsevier B.V 01.02.2003; Elsevier; Elsevier Sequoia S.A
• Series: Resource and Energy Economics
• Subjects: Applied sciences; Economic growth; Economic models; Energy; Energy conservation; Energy economics; Energy policy; Exact sciences and technology; General, economic and professional studies; Innovation; Methodology. Modelling; Studies; Technological change; Asia; United States; Europe; Japan; America; United Kingdom; France; North America; Germany; Q43; Innovation; Energy; Economic growth; O41; Energy consumption; Technical progress; Endogenous; Energy conservation; Energetic efficiency; Economic impact; Macroeconometric model; Long term; Gross domestic product
• ISSN: 0928-7655; 1873-0221
• DOI: 10.1016/S0928-7655(02)00017-9

We present a model of growth driven by energy use and endogenous factor-augmenting technological change. Both the rate and direction of technological progress are endogenous. The model captures four main stylised 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 in 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.