Path Dependence, Political Competition, and Renewable Energy Policy: A Dynamic Model

Climate change mitigation requires sustainable energy transitions, but the political dynamics of these transitions are poorly understood. This article presents a general dynamic model of energy policy with long time horizons, endogenous electoral competition, and techno-political path dependence. Calibrating the model with data on the economics of contemporary renewable energy technologies, we show that partisan ideology produces large effects on energy policy if the competing parties disagree on the importance of energy policy in general. Endogenous electoral competition further strengthens these effects, provided the electorate considers energy policy an important issue. In addition, our model displays path dependence in the specific sense that the outcome depends on the historical order of elections. The results demonstrate that political dynamics could have large effects on the development of renewable energy and carbon dioxide emissions over time.