This article analyzes an economy where both non-renewable and a costly energy resource are essential inputs in production. The extraction of the non-renewable resources leads to emissions that increase the probability of a catastrophe. We find that, in contrast to the constant probability case, an endogenous probability of a catastrophe implies that some non-renewable resources might optimally be left in the ground. The larger the effect of the fossil energy use on the probability of a

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... he the fewer non-renewable resources will be extracted and the earlier should be the switch to the renewable substitute. The richer a country the earlier it should shift to the energy substitute. In the trade-off between higher consumption and a higher probability of a catastrophe, even small probability changes are likely to be more important for the planner than higher consumption.