Assessing the economic consequences of an energy transition through a biophysical stock-flow consistent model

Pierre Jacques, Louis Delannoy (delannoy.louis@outlook.com), Baptiste Andrieu, Devrim Yilmaz, Hervé Jeanmart and Antoine Godin
Additional contact information
Pierre Jacques: UCL - Université Catholique de Louvain = Catholic University of Louvain
Louis Delannoy: STEEP - Sustainability transition, environment, economy and local policy - Centre Inria de l'Université Grenoble Alpes - Inria - Institut National de Recherche en Informatique et en Automatique - LJK - Laboratoire Jean Kuntzmann - Inria - Institut National de Recherche en Informatique et en Automatique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes
Baptiste Andrieu: The Shift Project. Redesigning the economy to achieve carbon transition, ISTerre - Institut des Sciences de la Terre - IRD - Institut de Recherche pour le Développement - INSU - CNRS - Institut national des sciences de l'Univers - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc - CNRS - Centre National de la Recherche Scientifique - Université Gustave Eiffel - Fédération OSUG - Observatoire des Sciences de l'Univers de Grenoble - UGA - Université Grenoble Alpes
Devrim Yilmaz: AFD - Agence française de développement
Hervé Jeanmart: UCL - Université Catholique de Louvain = Catholic University of Louvain

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Abstract: The biophysical foundations of socio-economic systems are underrepresented in the vast majority of macroeconomic models. This lack is particularly troublesome when considering the links between energy, matter and the economy in the context of the energy transition. As a remedy, we present here a biophysical stock-flow consistent macroeconomic model calibrated at the global scale, that combines detailed bottom-up estimates for the high capital intensity of renewable energies and the decreasing energy return on investment (EROI) of fossil fuels. We find that the completion of a global energy transition scenario compatible with the 1.5 °C objective of the Paris Agreement leads to a decrease of the system's EROI and to high investment share, employment and inflation trends, characteristic of a "war economy". Our results further indicate that a slower growth rate eases the transition, and call for further work on post-growth scenarios studies.

Keywords: Ecological macroeconomics; Stock-flow consistent modelling; Energy transition; Energy return on investment (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-ene, nep-env, nep-hme and nep-pke
Note: View the original document on HAL open archive server: https://hal.science/hal-04087628v1
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Citations: View citations in EconPapers (8)

Published in Ecological Economics, 2023, 209, pp.107832. ⟨10.1016/j.ecolecon.2023.107832⟩

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Journal Article: Assessing the economic consequences of an energy transition through a biophysical stock-flow consistent model (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04087628

DOI: 10.1016/j.ecolecon.2023.107832

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