This usually means closing shop and opening in a company where energy is cheaper and the government lets you pollute as much as you want.

That happens, but it's far from the whole picture. When energy is cheap you grow a lot of low hanging fruit savings not taken that suddenly become worthwhile when prices rise. Market economy is ruthless about optimisation, and when a change from a wasteful process to a less wasteful process is even the tiniest bit more expensive to perform than just paying for the extra energy, then market economy dictates that it's not done.

Artificially increasing energy price can actually make an economy more competitive in the log run, when at one point in the future energy price will rise anyways. Even if we did not have any CO2 disposal problem, the era of fossil fuels would still end some day. Perhaps not even that far in the future, because imagine how much faster consumption would have risen in absence of any CO2 considerations.

> "at one point in the future energy price will rise anyways"

That's a silly assumption, unless you're expecting technological progress to grind to a halt.

Energy prices are dramatically cheaper than they were 100 years ago, when they were dramatically cheaper than they were 200 years ago.

Non-renewables are just that: not renewable. Discovering yet another deposit merely postpones the end, it does not change their finite nature. Will renewables eventually become cheaper than the last scraps of fossil fuel? Absolutely! Through both progress and supply quantities. But that's exactly what is happening here, "renewables before they were cool"

Categorizing sources into "renewable" and "non-renewable" doesn't change the math.

Centuries ago, our primary power source was lumber. Later it was coal and then whales and then oil. In the future it will be solar panels and fission and then fusion. The energy output of 1kg of fuel for a fusion reactor is many orders of magnitude more than what can be captured from burning 1kg of lumber.

And it's not a matter of "discovering a deposit". Hydrogen is the most abundant element in the solar system and in the universe.

Hydrogen is a medium, not a source. In many ways it's closer to the copper in a wire than to the crude in a pipeline.

To the best of my knowledge, hydrogen fusion is the source of well over 99% of all energy generated both in our solar system and galaxy.

Probably a bit, but there is only so much juice to be squeezed out of the efficiency stone and it's hard to squeeze. It takes time and money and wherever the math penciled out comfortably it already happened. If drops in energy consumption happen quickly, deeply, or on a budget then it's probably demand destruction, not efficiency gain.

Check the numbers. Germany's economic output didn't shrink nearly as much as its energy usage did. For highly energy-intensive, low-value-added sectors like producing fertilizer and other chemicals, yes I agree, but in a lot of other sectors there are huge efficiency gains to be made that were never pursued because it wasn't worth it.

If you have an old, inefficient appliance (e.g. an incandescent lightbulb) and electricity is cheap, then it makes perfect economic sense to just keep operating the appliance and only replace it with a newer more efficient model once it actually breaks down. If electricity prices suddenly triple (which they did for a brief time in Germany), suddenly it starts making a lot of sense to start moving up the replacement date for those older less efficient appliances.

Don't get me wrong, the energy shock was indeed quite economically harmful to Germany, but saying that pure demand destruction is the only thing that explains a drop in electricity usage is just wrong.

> Germany's economic output didn't shrink nearly as much as its energy usage did.

So the demand destruction happened in the most energy intensive and lowest value-added sectors, which make up less than 100% of the economy. That's what I would expect, it's not a contradiction. If a hawk eats the slowest lizard, the lizard population gets faster -- but not because any individual lizard got faster.

I hope your conclusion is correct, but your reasoning around the alternative hypothesis isn't.