Conditions for the Transition of an Economy to Renewable Energy Sources
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Publication date: 2017-02-28
GNPJE 2017;287(1):33-51
The gradual depletion of non-renewable resources is a fact. Such resources are used in the production process not only as a material, but also as the main energy source. The purpose of this paper is to make a comprehensive analysis of conditions for the transition of an economy to renewable energy sources. The analysis is conducted with the use of a simple mathematical model of the economy, taking into account the complementarity of energy and physical capital. The decision to switch to renewable energy sources is treated solely as an economic policy decision in the model. The necessary conditions are derived for an economy to give up non-renewable energy sources at a fixed point in the future. These conditions include a specific level of ecological preferences of society, low energy-intensiveness of physical capital, and a sufficient stock of natural energy resources. The paper is theoretical in its nature. It establishes the influence of various macroeconomic aspects on the implementation of an intended economic policy.
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