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Fossil fuel producing economies have greater potential for industrial interfuel substitution

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  • Steinbuks, Jevgenijs
  • Narayanan, Badri G.

Abstract

This study analyzes industrial interfuel substitution in an international context using a large unbalanced panel dataset of 63 countries. We find that compared to other countries fossil fuel producing economies have higher short-term interfuel substitution elasticities. This difference increases further in the long run as fossil fuel producing countries have a considerably longer adjustment of their fuel-using capital stock. These results imply lower economic cost for policies aimed at climate abatement and more efficient utilization of energy resources in energy-intensive economies.

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  • Steinbuks, Jevgenijs & Narayanan, Badri G., 2015. "Fossil fuel producing economies have greater potential for industrial interfuel substitution," Energy Economics, Elsevier, vol. 47(C), pages 168-177.
    • Handle: RePEc:eee:eneeco:v:47:y:2015:i:c:p:168-177
    DOI: 10.1016/j.eneco.2014.11.001
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    More about this item

    Keywords

    Dynamic linear logit; Fossil fuel production; Industrial energy demand; International interfuel substitution;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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