Estimating Path Dependence in Energy Transitions
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. electricity sector’s use of coal - the most climate-damaging fuel - across 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 substitution parameter from reduced-form estimates and explores conditions for triggering sustained future clean energy transitions.
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Copy CitationKyle C. Meng, "Estimating Path Dependence in Energy Transitions," NBER Working Paper 22536 (2016), https://doi.org/10.3386/w22536.Download Citation
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