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Frédéric Teulon,

“Economic Growth and Energy Transition:

Overview and Review of the Literature,”
Volume 40, Number 2

Copyright 2015

Frédéric Teulon*

S ince the first oil shock of 1973, the developed nations have made significant
efforts adjusting and adapting to higher oil prices and volatility. However,
dependence on “black gold” remains high and the major environmental problems
linked notably to greenhouse gases (GHGs) have still not been resolved. Concerns
regarding GHGs and climate change have grown world-wide over recent years
with increased extreme weather conditions such as hurricanes, droughts, and
flooding. The current challenges linked to climate change have led to the issue of
“energy transition,” in other words, shifting from one dominant energy source to
another or introducing new sources of energy. In the current context, this involves
a transition from nonrenewable carbon-dioxide (CO2)-emitting fossil fuels to an
energy mix with a predominance of renewable energy systems (or low-carbon
energies). The word “transition” suggests that the passage from one energy system
to another takes place over a relatively long time frame (needed time for con-
sumption habits to change and to adapt housing and develop transport systems for
the new energies). Several questions spring to mind and remain unanswered on
how this transition will unfold: What are the historical precedents? Is the issue of
energy transition raised in the same way in all countries? How can we move away

*Frédéric Teulon is Executive Head of Research and Professor at IPAG Business School
(Paris, France) and has held professorships at various universities in Paris. His main research
areas are macroeconomics, energy, and international finance. His most recent articles have
been published in refereed journals such as The Journal of Energy and Development, Economic
Modelling, Energy Economics, Energy Policy, Applied Economics, Journal of Applied Business
Research, and the Economics Bulletin. The author is the founder of an international conference on
energy, the ISEFI (International Symposium on Energy and Financial Issues), which takes place
every year in Paris.

The Journal of Energy and Development, Vol. 40, Nos. 1 and 2

Copyright Ó 2015 by the International Research Center for Energy and Economic Development
(ICEED). All rights reserved.

from a short-term perspective to longer-term goals? Does it mean phasing out or

reducing nuclear power? Might the approaches to address global warming be
harmful to growth? Does energy transition require economic transition? Which
factors are most likely to influence the pace of transition?
In the first section of this article, we look at the way growth has been based on
ever greater energy consumption over the last two centuries. The subsequent
section is devoted to the current context, which has given energy transition a new
dimension. Finally, in the latter section, we argue that growth based on new
sources of energy is possible.

Energy at the Root of Growth

Energy as a Production Factor: With the industrial revolution, energy became

a vital factor as it enabled the conditions to use machines rather than the strength of
humans or animals. Thus, since the end of the 18th century, growth in energy pro-
duction has been a long-term concern, without consideration for the environmental
issues linked to large-scale energy use. Our society became “thermo-industrial.”1
Energy plays a crucial role in terms of demand (it is a good consumed as an end
product that enables consumers to increase their usefulness) and supply (energy is
a key production factor). Consumer and producer rationality means that both seek
out the least-expensive sources of energy. Countries look for “energy security” by
diversifying energy sources and limiting recourse to foreign suppliers. In mac-
roeconomic terms, economists define capital, labor, energy, and non-energy ma-
terials (KLEM) production functions that enable us to distinguish energy from
Q ¼ f ðK; L; E; MÞ
with capital (K), labor (L), energy (E), and non-energy materials (M).
The hypotheses retained means we should keep in mind include the following:
ex-ante and ex-post capital-energy substitution (putty-putty); ex-ante and ex-post
complementarity (clay-clay); or ex-ante substitution but ex-post complementarity
Moreover, the use of capital-generating functions gives us a better understanding
and measurement of the relations between energy and other production factors.
Over and above the theoretical arguments, we need to remember that, after the
Second World War, much of the economic growth in developed countries was the
direct result of an increase in the use of fossil fuels per capita.2 The standard
econometric representation of the link between energy and growth may be written
Ge ¼ b1 þ b2 GGDP þ b3 GDPCAP þ b4 P

where Ge = the rate of growth in energy consumption; GGDP = the rate of pro-
duction growth; GDPCAP = the level of gross domestic product (GDP) per capita;
P = the price of oil; b2 > 0; b3 < 0 (the richer the country the less energy-intensive
its GDP); and b4 < 0 (hikes in oil prices reduce consumption).
As J.-M. Jancovici reminds us:3

Our productive activities are simply a succession of transformations that begin with (free)
resources to end with products and services. Each firm or similar along the chain produces
some form of “added value” that measures the “best economic solution” between what comes
in and what goes out of the firm. However, it is possible to quantify this same “best” by using
a unit other than money, and arising from a physical source: i.e., energy that, by definition,
measures the material transformation between before and after.

This representation of production and energy reflects our naturalist ontology,

specific to Western civilizations: nature and all the phenomena that exist in-
dependently of human activities are perceived as separate, with characteristics and
patterns that individuals are supposed to be able to explain (in this context, science
and technology are reputed to be able to explain nature, and energy is the
Leviathan that gave birth to mechanization).4
In the present context, finding an optimal response to climate change depends
on the hypothesis made about the development of technology (and so, too, about
the form of the production system) and the way this development is influenced by
public policies.
J. Chontanawat et al. find that:5

Causality from energy to GDP is found to be more prevalent in the developed OECD countries
compared to the developing non-OECD countries; implying that a policy to reduce energy
consumption aimed at reducing emissions is likely to have greater impact on the GDP of the
developed rather than the developing world.

Long-Term Cycles: Kondratiev and Schumpeter pointed out that growth is not
regular; there are periods of prosperity, followed by periods of stagnation. These dif-
ferent phases may be linked to the dynamism and then the cannibalization of innova-
tion (the creative destruction process). Innovations increase the stock of knowledge
available and generate gains in productivity. To date, the main phases of innovation
have been linked to energy. Thus, the great period of prosperity from 1848 to 1873 was
linked to the use of coal and improvements to the steam engine (invented by James
Watt). The period of prosperity from 1896 to 1929 is linked to the use of electricity
(exemplified by the work of Thomas Edison that resulted in the incandescent electric
lamp in 1878). In the 19th century, Kondratiev demonstrated periodic “waves” of be-
tween 40 to 60 years from studies based mainly on the evolution of prices. Thus, we
can interpret crises as a necessary transition period between two energy systems.
Today, the notion that there are regular economic cycles is being called into
question, but innovation is considered more than ever to be at the root of growth.

This is demonstrated in research by Philippe Aghion (in analysis that he popu-

larized in his recent book).6 We are still waiting for new innovations that can
radically alter our present energy model.

Lessons from the Past: Several energy transitions have already taken place
since the 16th century; traditional forms of energy (wood, coal, and peat) were
gradually replaced by bituminous coal (mined coal).7 In the case of the United States,
coal arrived relatively late but had completely replaced wood by the 1880s; from the
middle of the 19th century, the supremacy of coal was challenged by electricity and
oil and, in the 1930s, hydrocarbons became dominant in the United States.
From a historical perspective, the main waves of innovation that underpinned
growth deployed new sources of energy (coal, then oil) combined with new ways
of transport (the steamboat and railway, then the car and aviation), which were
associated with new kinds of life-styles that transformed production methods.
Growth based on nonrenewable energy leads to higher production costs (which
help to avoid the total depletion of the resource in question and generate a move
toward energy sources that consequently become less expensive). The re-
placement of one source of energy by another in the production system may be due
to the fact that the new energy is cheaper, is available in larger quantities, or that it
offers productivity gains. The effects of energy transitions are complex (for
example, the existence of reconversion costs linked to changes in infrastructure,
but also gains linked to the development of new means of transport).
Geopolitical issues are also important. Thus, the passage from coal to oil led to
dependence on a source of energy not available domestically in many countries—a
transition that conferred a globally strategic role upon Middle Eastern countries.
Today, 80 percent of global primary energy consumption is based on fossil fuels.
The present energy transition is unique given concern for the planet due to global
warming linked to carbon emissions. These emissions may be modelled as follows:8

C t ¼ f ðQt ; Q2t ; Efnr t ; T t ; U t Þ

with carbon emissions per capita (Ct), production (Q), nonrenewable fossil energy
(Efnr), degree of opening (T), and percentage of city dwellers in the total pop-
ulation (U).
The equation to be calculated becomes:9
lnC t ¼ a1 þ a2 Qt þ a3 Q2t þ a4 Efnr t þ a5 T t þ a6 U t þ mt

with m a random error. The Kuznets curve demands that a2 > 0 and a3 < 0;
moreover, a4 > 0. If a5 < 0, pollution is reduced due to stricter environmental laws
and more effective imported technologies. G. Grossman and A. Krueger consider
that a5 > 0, so international trade stimulates both production and pollution.10

The Present Context: Awareness that Failure to Take Energy Transition into
Account Risks Destroying Wealth

Ecological Claims and Oil Price Shocks: The world has changed, and the
economic and energy order established after the Second World War is being chal-
lenged. However, the present growth model is increasingly viewed as destructive
with severe environmental consequences. Environmental claims first voiced at the
end of the 1960s have highlighted the negative external impact of growth (accu-
mulation of waste, programmed obsolescence of products, groundwater pollution,
etc.). Until the interwar period, the biosphere (ocean and forests) absorbed the
amount of CO2 emitted into the atmosphere with few or no harmful effects. Today,
the increase in emissions, through a combination of rising population and economic
activity linked to higher consumption, means the biosphere can no longer absorb
this level of greenhouse gases. The more fossil fuels we use, there is the real risk of
making it more difficult to maintain global sustainability.
There is heightened awareness of the harmful effects of energy production, but
the Kuznets environmental curve—according to which, after a certain develop-
ment threshold is reached, countries will be less polluting—has not yet taken
place.11 Moreover, the creation of the Organization of the Petroleum Exporting
Countries (OPEC) followed by the oil price shocks of the 1970s has led to the end
of an era—that of cheap energy. The rise in the price of hydrocarbons is relatively
good news for the environment in the long term, although not necessarily for
global economic growth. The 2015 slump in the oil price per barrel (below the $80
threshold) is more of a counter-signal, as renewable energies consequently be-
come less competitive, while the exploitation of oil deposits that emit the most
greenhouse gases (Arctic oil, Canada’s oil sands) also see their profitability
Hikes in the price of oil and gas—in the 1970s and then in the mid-2000s —provide
producer countries with revenues, but such a situation is not necessarily an
advantage. Economists refer to the “Dutch disease” (blocked development due to
a stronger currency, per W. Corden and J. Neary),12 or the “resource curse”
(R. Auty)13 whereby countries rich in natural resources fail to use the wealth to
diversify their economies, shifting wealth from growth into development. Exporting
countries from the Middle East have found it difficult to anticipate the depletion of
their resources adequately or to implement Hartwick’s rule14 to calculate the amount
of investment (infrastructure, machines, education, etc.) needed to offset the de-
crease in nonrenewable resource stocks.
Thus, while economic growth is linked to energy consumption, paradoxically
there can be a negative relationship between growth and natural resource own-
ership. Numerous studies on the topic, notably by J. Sachs and A. Warner,15 have
shown that one of the most surprising aspects of economic growth in the modern
world is that resource-rich countries have a lower growth rate than others and that

the revenues, in some instances, can promote corruption and poor management.
Rentier states tend to develop policies based on state-controlled revenue allocation
rather than on creating new wealth through production (for the case of Algeria, see
D. Bonet and F. Teulon).16
Resource Depletion: The notion of resource depletion was first discussed in
the 19th century by Stanley Jevons. In a book entitled The Coal Question (1865),
Jevons, a pessimist, predicted that the United Kingdom’s growth would grind
to a halt since, in his view, it was linked to coal, and British mines were running out
of this source of energy.17 Less than a year after the beginning of the industrial
revolution, Jevons considered it was inevitable that growth would stagnate. In order
to compensate future generations for the excessive consumption of a resource that
was steadily being exhausted, he suggested the government reimburse the public
debt. This concern (pressure on resources) was also at the heart of the Club of Rome
Report, which recommended the adoption of zero growth.18
The environmental crisis may be reinterpreted through the lens of “desynch-
ronization,” a notion held by the sociologist H. Rosa:19 some products are polluting
as they are produced at a faster pace than that required by nature to break them
down. The gap appears to be even higher between the pace of fossil fuel extraction
and the time needed for its natural renewal.
Two aspects should be distinguished with regard to resource conservation.20
The first involves situations where different countries need to combine actions as
in the fight against pollution, clean air action plans, biodiversity, and so on. The
problem is similar to the “prisoner’s dilemma” as each country may be tempted to
wait for the other to act, yet only action by the largest number will have the impact
required. Indeed, greenhouse gases have a similar impact no matter where they
originate. Reducing them only at a regional level would be ineffective if the
emissions continue to increase elsewhere. Thus, conservation of environmental
resources requires greater international cooperation. The second aspect relates to
situations where nations compete for access to primary resources (depletion of
nonrenewable resources required for production and the need for supply security),
which is a potential source of conflict.
Nonrenewable resources bring us back to the question of revenues, specifically
those flowing to the owner of the resources. Harold Hotelling raised the issue of
the optimal pace of a resource’s extraction in relation to the rise in its price.21
Hotelling’s model is equal to the difference between the selling price and the
marginal cost of extracting it, which should increase as the resource becomes
scarcer. Owners of a resource perform a trade-off with an intertemporal slant: they
may be tempted not to sell immediately so as to sell at a later date or, on the
contrary, to sell at once and invest their money either in internal projects or fi-
nancial markets. Therefore, they look for the period t that maximizes the current
value of what they want to sell:


with R as revenue and r the rate of interest.

Investor trade-offs lead to a situation where the interest rate is equal to the
revenue growth rate. This economic theory is not applicable in the present context
since, if we continue to use fossil-fuel reserves on a great scale, the plant’s hab-
itability could be threatened.
Hotelling’s rule states that nonrenewable resources should be extracted in
quantities that equal the percentage of price variation along with the added value
created from production due to this extraction. In the present context, lawmakers
must also take into consideration the additional cost linked to the fact that this
extraction will lead to more carbon emissions in the atmosphere, thereby increasing
the likelihood of widespread economic, social, and biological challenges and
It is impossible to calculate the exact amount of hydrocarbon reserves for three
reasons: (1) the quantity of reserves is closely tied to the evolution of prices (when
prices rise, higher exploitation costs are easier to accept, which, in turn, means oil
companies can use the newest techniques to extract more hydrocarbons); (2)
technical progress impacts on the drilling technology so that more energy can be
extracted for the same price; and (3) the amount of reserves is a strategic variable
used by firms and countries to influence investor behavior.
Moreover, today there are technical processes that allow liquid fuels to be made
from coal or gas (but these processes are economically viable with the price per
barrel of oil at around $110–$120). These fuels might be viewed as a new solution,
limiting price rises and pressure on oil resources. Finally, we should note, as A.
Greenspan did, that: “oil replaced coal despite still vast untapped reserves of coal,
and coal displaced wood without denuding our forest lands.”22
The Climate “Tipping Point”: In the coming years, the biggest concern is of
considerable climate change and a significant rise in sea levels. In their report, the
experts gathered around D. Stern concluded that: (1) climate change is a major
problem; (2) there is a need to undertake urgent action; (3) climate policy must be
guided by an analysis of the costs/advantages of reducing greenhouse gas emis-
sions; and (4) this policy must be based on market instruments such as taxation or
tradable pollution permits.23 The report highlighted the potentially most severe
impacts of climate change: annual losses equivalent to 5-percent of global gross
domestic product (GDP), the displacing of 150 to 200 million people (climate
refugees), reduction in agricultural productivity in Africa, etc. The report con-
sidered that there was a risk of a similar economic collapse to that caused by the
two World Wars or the depression of the 1930s. According to D. Stern, it will cost
a lot more if we wait to counter climate change when the impact is devastating,
than if we act now as we enter the transition stage.

Although the report has been criticized by some experts such as Richard Tol
and William Nordhaus (economists who consider the document is more po-
litical than truly scientific), may believe the climate situation has become
critical. Should we not consider climate as a global public good (a good that is
accessible to all nations that do not necessarily have a personal interest in
producing it)?

New Growth Based on Less Polluting Energies

New Energies: Energy demand depends on the growth of the global population
and the evolution of economic activity in a context of the world economy shifting
toward the emerging countries. A dual challenge needs to be resolved: (1) to find
solutions to meet higher global energy demand and (2) replacement of fossil fuels
by “clean” energies.
Several types of unlimited and largely free energy (once the equipment has
been installed) could replace oil, be produced by individuals, and create local jobs
that cannot be relocated: biomass or the use of organic materials of plant origin
that could become a source of energy by anaerobic digestion (AD) or chemical
transformation; photovoltaics (solar energy); geothermal energy; wind-powered
energy (both on and offshore); and tidal power (use of variations in sea level and
The solution to problems of energy security (avoidance of a nuclear disaster)
and climate change is the large-scale substitution of fossil fuels by non-CO2 emitting
energies. However, this involves a trade-off between present economic growth that
relies on the use of limited available resources and the uncertainties linked to cli-
mate change. A compromise needs to be established between the level of acceptable
risk and the reduction in the level of consumption.24
Thus, the basic model becomes:25
Qt ¼ f ðK t ; Lt ; Ert þ Efnr t ; M t Þ;

the function of production with capital (K), work (L), renewable energy (Er),
nonrenewable fossil energy (Efnr), and non-energy commodities (M).
Fossil fuel is cheap but is limited to stock, St. Consequently, b(St) is the
probability of a climate catastrophe, with St the quantity of fossil fuel left in the
ground. U (Ct) is a function of long-term use for a catastrophe that occurs on date
T, the objective function is:
Z T 
Et0 ¼ U ðC t Þe dt

The impact of the use of new energies on growth is uncertain: (1) renewable
energies are not competitive enough and (2) GDP is a very imperfect indicator of
growth sustainability (paradoxically, the damage done to the environment leads to
repair costs that increase GDP). It is better if sustainable growth (resource con-
servation) and utility (well-being) are measured separately. The Stiglitz report
observed: 26
A meter that added up in one single number the current speed of the vehicle and the remaining
level of gasoline would not be of any help to the driver. Both pieces of information are critical
and need to be displayed in distinct, clearly visible areas of the dashboard.

Other alternative energies are more controversial. Is shale gas an energy for the
future (we recently saw an upturn in U.S. growth based on this source of energy
and on new technologies)? Is nuclear power part of an energy transition or is it an
aspect of energy transition? Germany has decided to adopt coal as a means of
phasing out nuclear energy (coal-fired power stations account for 45 percent of the
electricity produced in the country), which would run counter to global warming
and appears to indicate that a large-scale return to old energies is not impossible.
In France, the role of nuclear energy (as primary nonrenewable electricity) re-
mains central (table 1).
New Types of Growth Based on Innovations and New Policies: Economists
have a wide range of tools available to promote clean energy: taxation, product
labeling, regulations, subsidies, marketable permits, emission charges, etc. The
success depends on “how the patient follows the doctor’s orders”: the actual use of
these tools tends to depart from the role that economists have conceived for them.27
Ronald Coase and John Dale are opposed to Arthur Pigou’s suggestion of state
intervention in the form of taxation to deal with external effects. To reduce air
pollution, Coase and Dale suggest the internalization of external effects via the
allocation of rights of resource ownership and the creation of a market to negotiate
these rights (here we are in a symmetrical case to that of taxes and, while the
outcome of the environmental policy is well known, the cost for agents is uncertain).

Table 1
(Percentage in 2012)

Primary Nonrenewable Wood Renewable

Gas Coal Oil Electricity Energy Hydro Energy Biofuel

14.8 4.2 30.3 41.5 3.9 1.9 1

Primary nonrenewable electricity is nuclear.
Source: France, Ministry of Ecology.

The presence of negative externalities does not necessarily justify corrective

state intervention as long as the costs of transactions between individuals are
negligible. The “Coase theorem” states that the presence of negative external
effects (like pollution) may be effectively countered by creating a market in which
rights relative to the resource used can be traded. 28 If transaction costs are low or
zero, agents can introduce a solution themselves that establishes an efficient re-
source allocation (in which case the market solution is better than the taxation
solution). State intervention is only needed if the transaction costs reach levels that
mean that no mutually beneficial agreement is possible. Consequently, it is pos-
sible to allocate an annual quantity of carbon credits to industries. The latter must
adapt to this constraint and they have the possibility to trade their credits on the
market. Factories that have the lowest marginal pollution reduction costs are
encouraged to install depollution facilities and to sell their excess credits to agents
with the highest costs.
Following these principles, the Emission Trading Scheme enables firms to buy
or sell their carbon credits (each firm is encouraged to compare the prevailing
price on the carbon market and the marginal cost of reducing pollution).
Sustainable growth (green growth), based on the development of new energy
sources, could create hundreds of thousands of jobs in Europe in a few years’ time
as well as reduce the energy bill. Some econometric studies have indicated a close
relationship between the use of renewable energies and economic growth.29
If we paraphrase the Brundtland report, we could say that the use of “sustainable
energy” enables the weighing of interests for future generations and avoids passing
on an “environmental debt.”30 New schemes are becoming increasingly popular
such as car sharing, intelligent meters, and the like. Passive houses (in German, the
Passivhaus) refer to buildings that require little energy per square meter and may
even be offset entirely by solar panels (some positive energy buildings even produce
more energy than they consume).
In France, the 2014 bill on “energy transition and green growth” (following on
from the 2007 “Grenelle de l’environnement” debate) plans to reduce greenhouse
emissions (down 40 percent by 2030), promote renewable energies (rising from
15 percent to 40 percent of electricity production), reduce the use of fossil fuels
(oil, gas, and coal), promote energy saving and efficiency (thermal renovation of
buildings, encouraging of the circular economy from product design to recycling,
etc.), and provide incentives for the purchase of an electric vehicle.
Difficulties: Applied in a radical way, energy transition could stifle growth as
production costs become too high or energy available for production becomes
scarcer. At present, there are still enough fossil fuel resources and the price of
nonrenewable energies remains far cheaper than most renewables. Partial or full
closure of nuclear reactors may have a very high cost in job terms. The question of
the ratio of nuclear power to total energy consumption in France (58 reactors in

operation) is still not clear. The country cannot say that it will reduce the share of
nuclear energy by 75 percent to 50 percent of total electricity production between
now and 2025 and then cap the energy produced by the nation’s power plants at the
current level.
In Europe, the Emission Trading Scheme has had little success; the price of
tradable EU emissions allowances slumped in 2006/2007, and then again in 2013/
2014. In his article “After Kyoto: Alternative Mechanisms to Control Global
Warming,” W. Nordhaus argued that price-based schemes (taxation) are more
effective than those based on a quantitative control of greenhouse gas emissions
(like the Kyoto protocol), but taxation needs to be wielded with caution as, driven
to too high a level, there is a risk that it will lead to a punitive form of ecology.31 To
be in line with the current challenges, lawmakers need to introduce a carbon value
that provides enough incentive to make low-carbon industry schemes profitable.
The financial aspect of the move to renewable energies is likely to hold some
surprises: What is the financial sustainability of such a transition in the present
(2015) context of economic crisis? In what proportion will energy prices rise for
Unlike previous energy transitions, the current period would appear to require
strong state intervention. This intervention is one of the characteristics of post-
industrial economies.32 Greater international cooperation is also required (Kyoto
protocol of 1997), with or without the United States.33 Successful energy transition
must be international, even if it is difficult to define the criteria that will allow the
cost to be shared globally among the different countries.34 A ton of CO2 has the
same impact on climate change whether it is emitted in the south or in the north.
The legitimacy of developed countries to impose across-the-board environmental
measures is extremely debatable in that they themselves benefited from conditions
that were highly favorable to their development, without taking the impact on the
biosphere into account (as the Kuznets curve shows us, if this can be verified).
Without sufficient effort on the part of the richest nations, the burden on the
poorest populations risks being far too heavy.
P.-N. Giraud reminds us that:35

Above all, we must not think that the avarice of nature could enable us to avoid serious
damage to the climate. Nature will give us all the hydrocarbons we want for several more
decades. The real question concerns that of the damage created by their extraction and their
combustion. We have two to three times too much fossil fuel compared to what we can allow
ourselves to burn if we take, as we must, the issue of climate change seriously.

The urgency of the challenges, together with their global nature, means that
environmental protection policies have little chance of resulting from popular con-
sensus based on “deliberative democracy.”36 A large number of countries ratified the
Kyoto protocol linked to the United Nations Framework Convention on Climate
Change of 1992 but the results as of 2014 have been very disappointing (table 2).

Table 2

Year Event

1969 Discovery of oil in the North Sea

1979 Second oil crisis
The Rio Earth summit is the first time the international community
1992 addresses the risk of climate change and where the United Nations
Framework Convention on Climate Change (UNFCCC) is negotiated
The Energy Policy Act in the United States is enacted with the goal of
promoting renewable energies
1997 The Kyoto protocol is adopted based on quantitative engagements
2005 The Kyoto protocol comes into effect
First period of commitment to limiting greenhouse gas emissions
(5-percent reduction compared to 1990 levels) in the framework
of the Kyoto protocol
Euronext creates the Low Carbon 100 Europe index to measure the
2008 performance of 100 of the largest European firms with the lowest
carbon intensity
The so-called “3 times 20” European Plan (20-percent reduction in
2009 greenhouse gas emissions, 20 percent of renewable energy, 20
percent energy savings)
2012 Doha Amendment to the Kyoto protocol sets second commitment
period from January 1, 2013 to December 31, 2020; as of July 2015 it
has not reached the required number of national ratifications
New European agreement to cut emissions by 40 percent by 2030
compared to 1990 levels
2015 Climate conference in Paris


Do we need an energy transition or an energy disruption? The question has now

been raised. For many years, growth and environmental concerns were considered
to be incompatible. This idea gave rise to two quite different positions with some
thinking we should not focus on environmental issues; while others, like Serge
Latouche, believing we need to focus on degrowth.37

The repeated failures of climate change conferences suggest that some coun-
tries prefer to opt for short-term growth rather than acknowledge the imperatives
of energy transition. However, there is no radical trade-off between ecology and
economy. Instead, energy transition requires an economic disruption in the sense
of setting aside the mindset that considers environmental damage to be proportional
to economic prosperity.
It is difficult, by nature, to develop a world governance of energy transition.
How can rich countries impose environmental norms on poor countries that are
hungry for rapid development while the formers’ power was based on the use of
polluting and nonrenewable energies?
Here, we agree with the conclusions of the report directed by F. Calderon and
N. Stern:38

Countries at all income levels have the opportunity to build lasting economic growth and at
the same time reduce the immense risk of climate change. This is made possible by structural
and technological changes unfolding in the global economy and opportunities for greater
economic efficiency. The capital for the necessary investments is available and the potential
for innovation is vast. What is needed is strong political leadership and credible, consistent

The different phases of the drop in oil prices (a 50-percent fall in the price per
barrel between September 2015 and September 2016, for instance) is not neces-
sarily good news for the global economy: (1) some industrialized countries like
France, Italy, and Spain will see their situation improve in the short term, with the
risk that they fail to initiate the internal structural reforms required; (2) risk exists
of severe economic and geopolitical impacts in countries like Russia, Iran, and
Algeria—states whose political regimes are already fragile; and (3) energy tran-
sition risks being postponed as a consequence.

A. Gras, Le choix du feu. Aux origines de la crise climatique (Paris: Fayard, 2007).
R. Hannesson, “Energy Use and Economic Growth, 1965-2012,” IAEE Energy Forum (third
quarter 2014), and M. Shahbaz, M. Arouri, and F. Teulon, “Short- and Long-Run Relationships be-
tween Natural Gas Consumption and Economic Growth,” Economic Modelling, vol. 41, issue C (2014),
pp. 219–26.
J.-M. Jancovici, “Climat, énergie: la croissance peut-elle continuer?” Le Monde, November
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