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Path dependence in energy systems and economic development

Abstract

Energy systems are subject to strong and long-lived path dependence, owing to technological, infrastructural, institutional and behavioural lock-ins. Yet, with the prospect of providing accessible cheap energy to stimulate economic development and reduce poverty, governments often invest in large engineering projects and subsidy policies. Here, I argue that while these may achieve their objectives, they risk locking their economies onto energy-intensive pathways. Thus, particularly when economies are industrializing, and their energy systems are being transformed and are not yet fully locked-in, policymakers should take care before directing their economies onto energy-intensive pathways that are likely to be detrimental to their long-run prosperity.

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Figure 1: Subsidies and consumption of fossil fuels in energy-producing economies.

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Acknowledgements

I thank F. Green, A. Kopp and N. Stern for discussions. Financial support from the ESRC is gratefully acknowledged.

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Correspondence to Roger Fouquet.

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Fouquet, R. Path dependence in energy systems and economic development. Nat Energy 1, 16098 (2016). https://doi.org/10.1038/nenergy.2016.98

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