The impact of the net-zero transition on aggregate productivity

Emilien Ravigné () and François Lafond
Additional contact information
Emilien Ravigné: The Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Abstract: The net-zero transition requires investment but is expected to induce cost declines in various parts of the economy, notably in renewable energy. The overall effect on aggregate productivity growth, a key driver of GDP and income, is therefore an empirical question. Here, we develop a simple framework that maps sectoral price and quantity paths, readily available from techno-economic transition scenarios, into aggregate total factor productivity (TFP) growth. Our approach combines a reduced-form industry level mapping and Domar aggregation. We validate both steps on historical data to show that our long-horizon forecasts are close to unbiased and to use backtest forecast errors as data-driven prediction intervals. We apply the framework to UK economy-wide scenarios and find small aggregate effects by 2050, either slightly positive or modestly negative (-1.2% to +0.1%). By contrast, we find that global energy transition scenarios with rapid renewable deployment imply substantial aggregate productivity gains, about 3% by 2050.

Keywords: Aggregate productivity; Net-zero transition; Production network (search for similar items in EconPapers)
Pages: 61 pages
Date: 2026-10
References: Add references at CitEc
Citations:

Downloads: (external link)
https://oms-inet.files.svdcdn.com/production/files ... 26.pdf?dm=1793200331 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2026-29

Access Statistics for this paper

More papers in INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by INET Oxford admin team ().