Optimal transition to renewable energy with threshold of irreversible pollution

When cheap fossil energy is polluting and pollutant no longer absorbed beyond a certain concentration, there is a moment when the introduction of a cleaner renewable energy, although onerous, is optimal with respect to inter-temporal utility. The cleaner technology is adopted either instantaneously or gradually at a controlled rate. The problem of optimum under viability constraints is 6-dimensional under a continuous-discrete dynamic controlled by energy consumption and investment into production of renewable energy. Viable optima are obtained either with gradual or with instantaneous adoption. A longer time horizon increases the probability of adoption of renewable energy and the time for starting this adoption. It also increases maximal utility and the probability to cross the threshold of irreversible pollution. Exploiting a renewable energy starts sooner when adoption is gradual rather than instantaneous. The shorter the period remaining after adoption until the time horizon, the higher the investment into renewable energy.

[1]  Computing the viability kernel in large state dimension , 2006 .

[2]  M. Moreaux,et al.  Equilibrium Transitions from Non Renewable Energy to Renewable Energy under Capacity Constraints , 2015 .

[3]  Miltiadis Makris,et al.  Necessary conditions for infinite-horizon discounted two-stage optimal control problems , 2001 .

[4]  Caam Cees Withagen,et al.  Optimality of irreversible pollution accumulation , 1996 .

[5]  Olli Tahvonen,et al.  Fossil Fuels, Stock Externalities, and Backstop Technology , 1997 .

[6]  C. Withagen,et al.  Too Much Coal, Too Little Oil , 2012 .

[7]  Simone Valente.  ENDOGENOUS GROWTH, BACKSTOP TECHNOLOGY ADOPTION, AND OPTIMAL JUMPS , 2009, Macroeconomic Dynamics.

[8]  Reinhard Madlener,et al.  Sustainable energy futures: Methodological challenges in combining scenarios and participatory multi-criteria analysis , 2009, Eur. J. Oper. Res..

[9]  William D. Nordhaus,et al.  The Allocation of Energy Resources , 1973 .

[10]  Mabel Tidball,et al.  Ordering the Extraction of Polluting Nonrenewable Resources , 2008 .

[11]  Patrick Saint-Pierre,et al.  Beyond Optimality : Managing Children, Assets, and Consumption over the Life Cycle , 2008 .

[12]  Raouf Boucekkine,et al.  Optimal regime switching and threshold effects , 2013 .

[13]  James D. Hamilton.  Analysis of time series subject to changes in regime , 1990 .

[14]  Fabien Prieur,et al.  The environmental Kuznets curve in a world of irreversibility , 2007 .

[16]  Stephen L. Parente.  Technology adoption, learning-by-doing, and economic growth , 1994 .

[17]  Adrien Vogt-Schilb,et al.  Optimal Transition from Coal to Gas and Renewable Power Under Capacity Constraints and Adjustment Costs , 2014, Environmental and Resource Economics.

[18]  S. Mirasgedis,et al.  A multiple criteria decision-aid approach in defining national priorities for greenhouse gases emissions reduction in the energy sector , 2003, Eur. J. Oper. Res..

[19]  Raouf Boucekkine,et al.  TECHNOLOGY ADOPTION UNDER EMBODIMENT: A TWO-STAGE OPTIMAL CONTROL APPROACH , 2004, Macroeconomic Dynamics.

[20]  Donatien Hainaut.  Impulse Control of Pension Fund Contributions, in a Regime Switching Economy , 2013 .

[21]  Elmar Lukas,et al.  Timing and eco(nomic) efficiency of climate-friendly investments in supply chains , 2012, Eur. J. Oper. Res..

[22]  W. Nordhaus.  The Cost of Slowing Climate Change: a Survey , 1991 .

[23]  A. Bensoussan,et al.  Hybrid control and dynamic programming , 1997 .

[24]  R. Boucekkine,et al.  Viable Ramsey Economies , 2014 .