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Effects of consumer subsidy on household fuel switching from coal to cleaner fuels: A case study for anthracites in Korea

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  • Park, Hojeong
  • Kwon, Hyucksoo

Abstract

The Korean coal industry is in a transition under low carbon policy through the steady reduction of coal production. Since consumer subsidy for the consumption of anthracites briquette in low-income households caused a distortion in domestic coal market, the so-called coupon program will be the first target in energy reform policy in order to induce fuel switching from anthracites to alternative clean energy. This paper tries to identify various factors that influence households' fuel switching decision. Disutility from briquette consumption is also considered as an important factor. Using the 2007 census data on briquette-consuming households, it is found that the coupon program provides an adverse effect to switching fuels to clean energy while the disutility of briquettes is positively associated with the probability of fuel switching. However, the empirical finding suggests that the policy alone attempting to remove coupon program may fail to switch fuels unless the cost of boiler changes is substantially reduced through the provision of accessible networks to alternative energy sources. It indicates that reform policy for consumer subsidy must be understood in line with more comprehensive regional energy plans to resolve energy poverty issue.

Suggested Citation

  • Park, Hojeong & Kwon, Hyucksoo, 2011. "Effects of consumer subsidy on household fuel switching from coal to cleaner fuels: A case study for anthracites in Korea," Energy Policy, Elsevier, vol. 39(3), pages 1687-1693, March.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1687-1693
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    References listed on IDEAS

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    1. Park, Hojeong & Lim, Jaekyu, 2009. "Valuation of marginal CO2 abatement options for electric power plants in Korea," Energy Policy, Elsevier, vol. 37(5), pages 1834-1841, May.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    3. Susan Olivia & John Gibson, 2008. "Household Energy Demand and the Equity and Efficiency Aspects of Subsidy Reform in Indonesia," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 21-40.
    4. Gupta, Gautam & Kohlin, Gunnar, 2006. "Preferences for domestic fuel: Analysis with socio-economic factors and rankings in Kolkata, India," Ecological Economics, Elsevier, vol. 57(1), pages 107-121, April.
    5. Martin Baughman & Paul Joskow, 1975. "The Effects of Fuel Prices on Residential Appliance Choice in the United States," Land Economics, University of Wisconsin Press, vol. 51(1), pages 41-49.
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    Cited by:

    1. Chen, Jiahui & Liao, Hua & Zhang, Tong, 2024. "Empowering women substantially accelerates the household clean energy transition in China," Energy Policy, Elsevier, vol. 187(C).
    2. Ling, Zhongqian & Ling, Bo & Kuang, Min & Li, Zhengqi & Lu, Ye, 2017. "Comparison of airflow, coal combustion, NOx emissions, and slagging characteristics among three large-scale MBEL down-fired boilers manufactured at different times," Applied Energy, Elsevier, vol. 187(C), pages 689-705.
    3. Kuang, Min & Zhu, Qunyi & Ling, Zhongqian & Ti, Shuguang & Li, Zhengqi, 2017. "Improving gas/particle flow deflection and asymmetric combustion of a 600 MWe supercritical down-fired boiler by increasing its upper furnace height," Energy, Elsevier, vol. 127(C), pages 581-593.

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