Unraveling the Drivers of Energy-Saving Technical Change

Känzig, Diego and Charles Williamson

No 20866, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We explore the increasing divergence between economic growth and energy consumption through energy-saving technical progress. Proposing a new measure of energy-saving technology, we study the underlying drivers in a semi-structural model of the U.S. economy. Our analysis shows that energy price shocks reduce consumption and stimulate energy-saving innovation, but also cause economic downturns and crowd out other innovations. Only energy-saving technology shocks can explain the negative co-movement between output and energy use. These sudden efficiency gains emerge as the primary driver of energy-saving technical change. Our findings highlight the importance of fostering energy-saving innovations in transitioning to a low-carbon economy.

Keywords: Directed; technical; change (search for similar items in EconPapers)
JEL-codes: E0 O30 Q32 Q43 Q55 (search for similar items in EconPapers)
Date: 2025-11
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