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Energy Intensity and Carbon Emission Responses to Technological Change: The U.S. Outlook

Technological progress, energy use, energy intensity, and carbon mitigation are tightly intertwined concepts within the worldwide climate change debate. The state-of-the-art National Energy Modeling System (NEMS) is used to examine, for the United States: (a) the potential role of technological progress on energy supply, consumption, and prices in U.S. energy markets and their impact on carbon emissions; (b) how "success" on one side of the supply or demand equation may reduce the potential benefits of technological progress on the other side; and (c) the sensitivity of energy intensity in the U.S. to technological change and adoption. Some of the key findings of the analysis include: (a) technological progress alone (without significant and effective new policies) is insufficient to achieve reduction of carbon emissions at or near 1990 levels by 2010; (b) successful R&D programs that improve the availability and market acceptance of cost-efficient transportation technologies, coupled with successful oil and gas supply R&D programs, could have a significant impact on reducing U.S. dependence on imported oil; (c) the annual rate of decline of energy intensity (primary energy used per dollar of GDP) between 1996 and 2015 appears to be bounded by 1.25 percent when real energy prices are relatively stable or gradually rising, even when more advanced technologies are made available to the market.

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Energy Specializations: Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes:
Q54 - Climate; Natural Disasters and Their Management; Global Warming
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts
F44 - International Business Cycles

Keywords: Technological progress, energy intensity, Carbon mitigation, US, energy policy, NEMS

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No3-4

Published in Volume20, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.