International Evidence on Sectoral Interfuel Substitution

Apostolos Serletis, Govinda R. Timilsina and Olexandr Vasetsky

The Energy Journal, 2010, vol. Volume 31, issue Number 4, 1-30

Abstract: This paper estimates interfuel substitution elasticities in selected devel­oping and industrialized economies at the sector level. In doing so, it employs state-of-the-art techniques in microeconometrics, particularly the locally .exible normalized quadratic functional form, 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). We .nd that on average, industrial and residential sectors tend to exhibit higher potential for substitution between energy inputs as compared to the electricity generation and transportation sectors in all countries, with the United States being the only exception. In addition, we .nd that developed countries demonstrate higher po­tential for interfuel substitution in their industrial and transportation sectors as compared to the developing economies. The implication is that interfuel substi­tution depends on the structure of the economy, not the level of economic devel­opment. Moreover, higher changes in relative prices are needed than what we have already experienced to induce switching toward a lower carbon economy.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://www.iaee.org/en/publications/ejarticle.aspx?id=2395 (text/html)
Access to full text is restricted to IAEE members and subscribers.

Related works:
Chapter: International Evidence on Sectoral Interfuel Substitution (2012)
Journal Article: International Evidence on Sectoral Interfuel Substitution (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aen:journl:2010v31-04-a01

Ordering information: This journal article can be ordered from
http://www.iaee.org/en/publications/ejsearch.aspx

Access Statistics for this article

More articles in The Energy Journal from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().