Clean Growth and Comparative Advantage

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AbstractThere has been significant progress in renewable energy technology in recent decades. The remarkable decline of renewable costs means that in much of the world, new construction of solar and wind projects is now cheaper than continuing to pay the generation costs of fossil fuel assets to produce electricity. As comparative advantage in energy use evolves, regional and country specialization in specific sectors could change as energy costs fall. These developments will likely affect the entire global production network. This research is a major endeavor to trace and quantify the implications of falling power prices for growth, production, and trade at both global and regional scale. The project aims to utilize rich data on global power grids, energy capital and renewable resources at a scale that has not been utilized before in economic modeling. The results of the project will have important implications for renewable electricity technology introduction and distribution, which is vastly different that the fossil-fuel dependent system. An additional aim of the project is to develop a cost benefit framework that will serve as a roadmap to policymakers and the public, assessing the effects of technological innovations in energy on the world’s ability to meet climate goals.The project represents a comprehensive macroeconomic, cross-country and regional analysis of renewable electricity technology introduction and spatial distribution, using detailed granular data. The data will be drawn from high-resolution satellite images and massive, open-source grid mapping projects. The data will be harmonized to make suitable for scientific and economic modeling, allowing a truly global view of the world energy system. This information will be combined with a new spatial growth framework featuring forward-looking decisions on energy adoption with a rich geographic structure, as well as cross-border trade in power and goods. The research aims to evaluate how the adoption of renewable energy will change global production and trade patterns given the specialization of countries and regions in different industries. The proposed theoretical framework is rich, yet ideally simple enough to be combined with earth system models that describe the complex interactions that lead to emissions and climate effects.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.