Sustainability, Globalization and the Energy sector A European perspective

Abstract : This paper analyzes the socio-economic effects of energy sustainability challenges raised by oil depletion and climate change at the European and global level. We assess macroeconomic impacts at different time horizons over 2010-2100 and under different visions of the future of globalization . Fragmented capital markets affect the pace and direction of change and induce additional economic losses in the long term. Regionalized good markets have a positive effect in the long term since less intense international trade moderates the effects of fossil fuel constraints. A sustainable energy future will require implementing policies and measures that are able to (i) provide correct incentives for long-term investments by resorting to other signals than current market prices, (ii) incorporate sectoral measures that act complementarily to pricing schemes measures for sectors confronted with biased agents' behaviors or strong inertias, (iii) foster globalization patterns that are consistent with energy sustainability objectives. The challenge consists in articulating the objectives and the instruments of these different policy and measures triggering the transition towards sustainable future.