Article,

Power shifts: the dynamics of energy efficiency

, and .
Energy Economics, 20 (5-6): 513-537 (1998/12/1)

Abstract

Induced technical change is crucial for tackling the problem of timing in environmental policy. However, it is by no means obvious that the state has the ability to impose its will concerning technical change on the other relevant actors. Therefore, we conceptualize power in a non-linear model with social conflict and induced technical change. The model shows how economic growth, business cycles and innovation waves interact in the dynamics of energy efficiency. We assess three different ways of government control: energy taxes, energy and labor subsidies, and energy caps. Energy taxes help to select more energy efficient technologies. However, a successful selection of such technologies presupposes that they are available in the pool of technologies. As for energy subsidies, their existence helps to explain why in contemporary economies labor productivity grows faster than energy efficiency. With an energy cap, the social network of the relevant agents may be stabilized via social norms. It seems plausible that innovation waves comprise several business cycles and that such a wave is currently in the making. Proposals to postpone policies for improving energy efficiency increase the risk of energy inefficient lock-in effects.

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