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Mineral Resources for Renewable Energy: Optimal Timing of Energy Production

Adrien Fabre, Mouez Fodha () and Francesco Ricci

No 2019.06, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: The production of energy from renewable sources is much more intensive in minerals than that from fossil resources. The scarcity of certain minerals limits the potential for substituting renewable energy for scarce fossil resources. However, minerals can be recycled, while fossils cannot. We develop an intertemporal model to study the dynamics of the optimal energy mix in the presence of mineral intensive renewable energy and fossil energy. We analyze energy production when both mineral and fossil resources are scarce, but minerals are recyclable. We show that the greater the recycling rate of minerals, the more the energy mix should rely on renewable energy, and the sooner should investment in renewable capacity take place. We confirm these results even in the presence of other better known factors that affect the optimal schedule of resource use: growth in the productivity in the renewable sector, imperfect substitution between the two sources of energy, convex extraction costs for mineral resources and pollution from the use of fossil resources.

Keywords: Renewable and Non-Renewable Natural Resources; Mineral Resources; Recycling; Energy Transition (search for similar items in EconPapers)
JEL-codes: Q3 Q2 Q42 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
Date: 2019-02
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http://faere.fr/pub/WorkingPapers/Fabre_Fodha_Ricci_FAERE.WP2019.06.pdf First version, 2019 (application/pdf)

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