Alternative Energy, Security Constraints and the Development of Bio-Energy

With the soaring of energy prices and environmental pollution brought by fossil-fuel consumption, bio-energy as a clean and sustainable energy, captures attentions of both governments and researchers. Although lots of literature discusses the effects of bio-energy policies, little studies the effects of government policy on economic growth. In this paper, we build an endogenous growth model to analyze government support for biomass energy and environmental protection, the dynamic relationship between bio-energy consumption and economic growth. From the analysis, we find that the development of bio-energy could result in a negative impact to agricultural production in a short time, but in the long run it can promote economic development. Besides, government´s persistent support could increase long-term economic growth rate.