Economic growth and the use of non-renewable energy resources

This thesis is a contribution to the analysis of the relationship between the economic growth and the usage of non-renewable energy resources. More precisely, it is studied the conditions under which energy-saving technologies can sustain long-run growth, even if energy is mainly produced by means of non-renewable energy resources, such as fossil fuels. A general equilibrium framework is considered, giving special attention to the dynamical properties of the economy. In accordance with the well-known debate of complementarity vs. substitutability between physical capital and energy as production inputs, this thesis is divided into two parts. The first part of this thesis assumes complementarity between physical capital and energy as production inputs, which captures the idea of the existence of a minimum energy requirement to use a machine. Even if in contrast with the standard literature on non-renewable energy resources, which assumes substitutability, the assumption of complementarity is indeed supported by various empirical studies. This relationship of complementarity allows one to introduce the assumption of different generations of machines coexisting in each period by adding a new variable to the firm's problem: physical capital replacement. In this first part of the thesis, it is provided a theoretical study of physical capital replacement, i.e., vintage effect, which is an important environmental policy when new machines are assumed to be more energy-saving. Following the standard literature on non-renewable energy resources, this second part of the thesis assumes substitutability between capital and energy. This branch of the literature gives central position to physical capital accumulation to offset the constraint on production possibilities due to use of non-renewable energy resources. This literature assumes the same technology for both physical capital accumulation and consumption, which implies (among other things) that the energy intensity of both sectors is the same. However, data do not support this implication and suggest that physical capital accumulation is relatively more energy-intensive than consumption. Following that, this second part of the thesis studies the implications of this hypothesis.