On Interfuel Substitution : Some International Evidence
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This paper estimates interfuel
substitution elasticities in selected developing and
industrialized economies at the national and sector levels.
In doing so, it employs state-of-the-art techniques in
microeconometrics, particularly the locally flexible
normalized quadratic functional forms, and provides evidence
consistent with neoclassical microeconomic theory. The
results indicate that the interfuel substitution
elasticities are consistently below unity, revealing the
limited ability to substitute between major energy
commodities (i.e., coal, oil, gas, and electricity). While
the study finds some evidences of larger interfuel
substitution potential in high-income economies as compared
to that in the middle- and low-income economies in the
industrial and transportation sectors, no such evidence is
observed in the residential and electricity generation
sectors or at the national level. The implication is that
interfuel substitution depends on the structure of the
economy, not the level of economic development. Moreover, a
higher change in relative prices is needed to induce
switching toward a lower carbon economy.
Palabras clave
APPROACH, AVAILABILITY, CARBON, CARBON DIOXIDE, CARBON DIOXIDE EMISSIONS, CARBON EMISSIONS, CLEAN ENERGY, CLIMATE CHANGE, CLIMATE CHANGE POLICY, COAL, COAL PRICE, CONSUMER DEMAND, CRUDE OIL, DEMAND FOR ENERGY, DEMAND FUNCTIONS, DIESEL, ELASTICITY OF SUBSTITUTION, ELECTRICITY, ELECTRICITY GENERATION, ELECTRICITY PRICES, ENERGY CONSUMPTION, ENERGY DEMAND, ENERGY DEMAND ANALYSIS, ENERGY ECONOMICS, ENERGY INPUT, ENERGY POLICY, ENERGY PRICES, ENERGY PROBLEM, EXPENDITURE, FOSSIL, FOSSIL FUEL, FOSSIL FUELS, FUEL, FUEL OIL, FUEL PRICE, FUEL PRICES, FUEL QUANTITIES, FUEL TYPES, FUELS, GAS, GASOLINE, GASOLINE PRICE, HIGH SULPHUR, HIGH SULPHUR FUEL OIL, HIGH-SULPHUR, HOUSEHOLD SECTOR, INCOME, INPUT PRICES, INTERNATIONAL ENERGY AGENCY, LIGHT FUEL OIL, NATURAL GAS, NATURAL GAS PRICES, NATURAL RESOURCES, OIL, OIL EQUIVALENT, OIL PRICE, OIL PRICES, PETROLEUM, PETROLEUM PRODUCTS, PRICE CHANGE, PRICE CHANGES, PRICE ELASTICITIES, PRICE ELASTICITY, PRICE INCREASES, PRICE INDEX, PRICE OF COAL, PRICE OF ELECTRICITY, PRICE OF GAS, PRICE OF GASOLINE, PRICE OF OIL, QUANTITY OF FUEL, SOURCE OF ENERGY, STEAM COAL, SUBSTITUTE, SUBSTITUTES, SUPPLY FUNCTIONS, WORLD ENERGY