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Energy Demand for Heating: Short Run and Long Run

Author

Listed:
  • Michael Hanemann

    (Arizona State University)

  • Xavier Labandeira

    (Rede (Universidade de Vigo) and Economics for Energy)

  • José M. Labeaga

    (UNED)

Abstract

Residential energy consumption, mostly due to residential heating, is a large component of energy demand in developed countries and thus a target for public policies aimed at reducing negative environmental effects and energy dependence. This paper uses Spanish household micro data to estimate a discrete-continuous model of residential energy demand for heating covering both the choice of energy source and the amount of energy used for heating. Relative fuel prices for heating influence the discrete decision on the type of energy source as a long-run effect. The short-run demand response to energy price changes is found to be limited but variable across the different energy sources for heating in Spain. Moreover, household demand responses consistently differ across rich and poor regions. A simple policy simulation illustrates the practical relevance of this empirical approach.

Suggested Citation

  • Michael Hanemann & Xavier Labandeira & José M. Labeaga, 2013. "Energy Demand for Heating: Short Run and Long Run," Working Papers 07-2013, Economics for Energy.
    • Handle: RePEc:efe:wpaper:07-2013
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    References listed on IDEAS

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    3. McFadden, Jonathan & Miranowski, John, "undated". "Climate Change Impacts on the Intensive and Extensive Margins of US Agricultural Land," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170512, Agricultural and Applied Economics Association.
    4. Silva, Susana & Soares, Isabel & Pinho, Carlos, 2018. "Electricity residential demand elasticities: Urban versus rural areas in Portugal," Energy, Elsevier, vol. 144(C), pages 627-632.
    5. Trotta, Gianluca & Hansen, Anders Rhiger & Sommer, Stephan, 2022. "The price elasticity of residential district heating demand: New evidence from a dynamic panel approach," Energy Economics, Elsevier, vol. 112(C).
    6. McFadden, Jonathan R., 2015. "Essays on climate change adaptation and biotechnologies in U.S. agriculture," ISU General Staff Papers 201501010800005635, Iowa State University, Department of Economics.
    7. Silva, Susana & Soares, Isabel & Pinho, Carlos, 2017. "Electricity demand response to price changes: The Portuguese case taking into account income differences," Energy Economics, Elsevier, vol. 65(C), pages 335-342.
    8. Yoon, Taeyeon & Ma, Yongsun & Rhodes, Charles, 2015. "Individual Heating systems vs. District Heating systems: What will consumers pay for convenience?," Energy Policy, Elsevier, vol. 86(C), pages 73-81.

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    More about this item

    Keywords

    environment; energy; security; discrete; continuous; choice; taxes; prices;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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