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Carbon Lock-In: The Role of Expectations

The Role of Expectations

descriptionPublicationkeyboard_double_arrow_right Article , Research , Other literature type , Journal , Preprint 01 Jan 2014Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

Authors: Gerard van der Meijden;

Sjak Smulders; Sjak Smulders;

doi: 10.2139/ssrn.2475876 , 10.1111/iere.12255

handle: 1871.1/8dcf8151-f40d-4282-aafd-faaa9b6688bc

Carbon Lock-In: The Role of Expectations

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Abstract

AbstractWe argue that expectations about future energy use affect the transition from fossil to renewables because of an interaction between innovation and resource scarcity. This article presents a model of directed technical change to study this interaction. We find that fossil‐saving technical change erodes the incentives to implement renewables. Conversely, the anticipation of a transition to renewables diminishes the incentives to invest in fossil technology. As a result, two equilibria may arise, one with a transition to renewables and with low fossil efficiency and one without renewables and with high fossil efficiency. Expectations determine which equilibrium arises.

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Keywords

Q42, technological change, O30 - General, Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth, Q32 - Exhaustible Resources and Economic Development, alternative energy sources, multiple equilibria, Directed technical change, energy transition, multiple equilibria, Directed technical change, Q32, O30, Q55 - Technological Innovation, Q55, non-renewable resources, endogenous growth, energy transition, Q42 - Alternative Energy Sources, jel: jel:Q42, jel: jel:O30, jel: jel:Q55, jel: jel:Q32, ddc: ddc:330

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Impact byBIP!

	citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).	25
	popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.	Top 10%
	influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).	Top 10%
	impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.	Average