Economic Growth and the Transition to Renewable Energy
WORKING PAPER
(706 KB)
This working paper analyzes when and how we should transition to green energy.
The authors argue that the transition to green energy can and should take place before non-renewable energy is exhausted. Their research uses a canonical growth model with two energy sources, including non-renewable energy that creates negative externalities in the form of CO2 emissions and renewable energy that emits much less CO2. Ultimately, the authors propose a solution that, given the cost of future externalities inherent in the continued use of fossil energy, recommends tax rates and subsidies to ensure a more rapid transition to renewable energy.