Estimating Path Dependence in Energy Transitions
NBER Working Paper No. 22536
What induces clean energy transitions? When transitional dynamics exhibit strong path dependence, a temporary shock to input composition can trigger permanent structural change. I examine whether such dynamics characterize the U.S. energy sector's use of coal - the most climate-damaging fuel - over the 20th century. Exploiting local coal supply shocks driven by changing regional accessibility of subsurface coal, I find increasing imbalance in the coal composition of electricity capital lasting ten decades following a shock. A structural change model enables recovery of a key structural parameter from reduced-form estimates and explores conditions for triggering sustained future clean energy transitions.
Document Object Identifier (DOI): 10.3386/w22536
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