Optimal energy policy planning

This paper describes the results of a study aimed at investigating the problem of optimal growth as an optimal control problem involving the maximization of welfare subject to the constraints embodied in a long-term macroeconomic energy model. For the policy optimization experiments, we as- -sumed that the set of policy instruments included the rate of taxes on capital income and Capital property, investment tax credits, sales taxes on consumption and investment goods and other tax rates. The performance index for the optimal control problem, is defined as the present value of a discounted stream of utilities accruing to households from the consumption of energy goods, nonenergy goods, capital services and leisure. The paper concludes with a discussion of the policy implications of the optimization experiments from the standpoint of long-term energy policy planning.