Energy Supply and the Sustainability of Endogenous Growth

The document examines the 'source problem' (energy supply) and 'sink problem' (pollution) within endogenous growth frameworks. It argues that while resource scarcity can drag down growth, it also creates incentives for directed technological change and efficiency gains that can sustain long-run development. The authors compare stylized analytical models with complex CGE-models, noting that the latter are better for sector-specific policy analysis but often act as 'black-boxes'.

• Endogenous growth models differ from neoclassical models by allowing feedback effects where energy shortages and pollution-induced losses can impact an economy's long-run growth performance.
• Resource scarcity can potentially increase economic growth if the resulting incentives for efficiency gains and the development of alternative energy sources are sufficiently strong.
• In models using CES-type production functions, technological change is directed toward the relatively scarcer input, meaning resource-intensive sectors may not vanish but instead conduct more research to enhance productivity.
• Pollution from non-renewable sources is often viewed as a temporary problem in long-run models because the flow of pollution necessarily decreases as the exhaustible resource is depleted.
• Resource taxation may lead to the 'green paradox', where a rising tax rate actually accelerates resource extraction because owners anticipate a future decrease in their non-taxed revenue share.
• CGE-models that incorporate endogenous growth, such as the one used to analyze Swiss carbon policies, show that capital accumulation can both substitute for energy and raise productivity, which mitigates the negative effects of carbon taxation on welfare.
• A CGE-model analysis of Switzerland found that a CO2 policy based on the Copenhagen Accord would result in moderate welfare losses, whereas a '2000 Watt society' scenario would result in lower losses due to being less stringent.
• Climate policies often produce 'ancillary benefits' beyond CO2 mitigation, such as improvements in local air quality (e.g., reduction of SO2 and particulate matter), which the authors argue should be integrated into optimal policy design.

APA

Pittel, K., & Rübbelke, D. (2010). Energy Supply and the Sustainability of Endogenous Growth. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201007130550291422798814.pdf

Chicago

Pittel, Karen, and Dirk Rübbelke. Energy Supply and the Sustainability of Endogenous Growth. Basque Centre for Climate Change, 2010. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201007130550291422798814.pdf.

Wikipedia

{{cite report |last1=Pittel |first1=Karen |last2=Rübbelke |first2=Dirk |title=Energy Supply and the Sustainability of Endogenous Growth |publisher=Basque Centre for Climate Change |date=July 2010 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201007130550291422798814.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pittel2010energy, author = {Pittel, Karen and Rübbelke, Dirk}, title = {{Energy Supply and the Sustainability of Endogenous Growth}}, institution = {Basque Centre for Climate Change}, year = {2010}, month = jul, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201007130550291422798814.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }