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

23 Pages Posted: 25 Jun 2013 Last revised: 31 Jan 2015

See all articles by Enrica De Cian

Enrica De Cian

Fondazione Eni Enrico Mattei (FEEM); CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Fabio Sferra

Fondazione Eni Enrico Mattei (FEEM)

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM); Princeton University - Princeton Environmental Institute

Date Written: June 24, 2013

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.

Keywords: Technological change and innovation, Energy investments, R&D Investments, Fossil fuel availability, Fossil fuel prices, Energy Intensity, Carbon Intensity

JEL Classification: O13, Q 43, Q54, Q55

Suggested Citation

De Cian, Enrica and Sferra, Fabio and Tavoni, Massimo, The Influence of Economic Growth, Population, and Fossil Fuel Scarcity on Energy Investments (June 24, 2013). FEEM Working Paper No. 59.2013; CMCC Research Paper No. RP0216 . Available at SSRN: https://ssrn.com/abstract=2284045 or http://dx.doi.org/10.2139/ssrn.2284045

Enrica De Cian (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

Campo S. M. Formosa, Castello 5252
Venice, 30122
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Fabio Sferra

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

Princeton University - Princeton Environmental Institute

22 Chambers Street
Princeton, NJ 08544-0708
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
130
Abstract Views
968
rank
235,006
PlumX Metrics