Conference Agenda

The energy transition is fundamentally a capital and technological transition. Countries face the joint challenge of expanding clean energy capacity while phasing down dirty assets in an orderly way to sustain growth, meet climate goals, and limit adjustment costs and stranded assets. While emission-intensive energy technologies still hold a productivity advantage, this gap is rapidly closing. Using a state-of-the-art growth model with sector- and technology-specific capital stocks, we compare optimal transition paths of an advanced industrialized economy to that of an emerging economy, using detailed calibrations stylized on the EU and India. In India’s context, rising demand and clean-technology catch-up drive immediate clean investment, with modest carbon pricing preventing a double transition of its energy capital stock. In the EU context, with limited remaining carbon budget, decommissioning high-emission legacy capital stock must begin immediately, and a higher carbon price is needed to drive the transition. For both jurisdictions, more ambitious climate policy entails modest economic losses, and carbon pricing outperforms net-zero mandates by reducing stranded assets and adjustment costs.