Optimal Transition to Renewable Energy with Threshold of Irreversible Pollution

Noël Bonneuil () and Raouf Boucekkine ()
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Noël Bonneuil: Institut national d’études démographiques, and École des hautes études en sciences sociales

No 1434, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: When cheap fossil energy is polluting and pollutant no longer absorbed beyond a certain concentration, there is a moment when the introduction of a cleaner renewable energy, although onerous, is optimal with respect to inter-temporal utility. The cleaner technology is adopted either instantaneously or gradually at a controlled rate. The problem of optimum under viability constraints is 6-dimensional under a continuous-discrete dynamic controlled by energy consumption and investment into production of renewable energy. Viable optima are obtained either with gradual or with instantaneous adoption. A longer time horizon increases the probability of adoption of renewable energy and the time for starting this adoption. It also increases maximal utility and the probability to cross the threshold of irreversible pollution. Exploiting a renewable energy starts sooner when adoption is gradual rather than instantaneous. The shorter the period remaining after adoption until the time horizon, the higher the investment into renewable energy.

Keywords: multi-stage optimal control; threshold e?ects; irreversibility; non-renewable resources; viability (search for similar items in EconPapers)
JEL-codes: C61 O33 Q30 Q53 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2014-08, Revised 2014-08
New Economics Papers: this item is included in nep-ene
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Related works:
Journal Article: Optimal transition to renewable energy with threshold of irreversible pollution (2016)
Working Paper: Optimal transition to renewable energy with threshold of irreversible pollution (2016)
Working Paper: Optimal Transition to Renewable Energy with Threshold of Irreversible Pollution (2014)
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