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Interfuel Substitution: A Meta-Analysis

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  • David I. Stern

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Abstract

Interfuel substitutability has been of longstanding interest to the energy economics and policy community. However, no quantitative meta-analysis has yet been carried out of this literature. This paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector, manufacturing industry or subindustries, or macro-economy of a variety of both developed and developing economies. Publication bias is controlled for by including the primary study sample size in the meta-regression. Results for the shadow elasticities of substitution between coal, oil, gas, and electricity for forty-six primary studies show that at the level of the industrial sector there are easy substitution possibilities between all the fuel pairs with the exception of gas-electricity and coal-electricity. Substitution possibilities seem more constrained at the macro level and less constrained in sub-industries. Estimates also vary across countries and there seems to be less substitutability in more developed economies. Publication bias does not seem to be present, but model and data specification issues very significantly affect the estimates derived by each individual study. Estimates from cross-section regressions are generally largest, fixed effects panel estimates intermediate in magnitude, and time-series estimates are mostly much smaller. Econometric research suggests that the fixed effects estimates are likely the best among the existing studies, though biased downwards.

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Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2009-06.

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Length: 65 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:pas:papers:2009-06

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Keywords: Meta-analysis; energy; substitution; elasticity; interfuel;

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Journal of Economic Surveys 2012
    by David Stern in Stochastic Trend on 2012-02-08 10:45:00
  2. Substitutability of Energy and Capital
    by David Stern in Stochastic Trend on 2010-04-20 00:00:00
  3. Journal of Economic Surveys
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  4. Why Most Published Research Results are False
    by David Stern in Stochastic Trend on 2009-07-23 23:23:00
  5. Designing a Job Talk
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  6. Interfuel Substitution and the Costs of Climate Change Policy
    by David Stern in Stochastic Trend on 2009-07-03 01:38:00
  7. Interfuel Substitution: A Meta-Analysis - Accepted for Publication
    by David Stern in Stochastic Trend on 2010-08-10 10:29:00
  8. The Environment and Directed Technical Change: Acemoglu et al.
    by David Stern in Stochastic Trend on 2010-04-28 08:28:00
  9. Revise and Resubmit...
    by David Stern in Stochastic Trend on 2009-11-16 22:33:00
  10. Energy Quality
    by David Stern in Stochastic Trend on 2009-08-19 12:43:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Beckman, Jayson & Hertel, Thomas & Tyner, Wallace, 2011. "Validating energy-oriented CGE models," Energy Economics, Elsevier, vol. 33(5), pages 799-806, September.
  2. Stern, David I., 2010. "Energy quality," Ecological Economics, Elsevier, vol. 69(7), pages 1471-1478, May.
  3. Adams, Philip D. & Parmenter, Brian R., 2013. "Computable General Equilibrium Modeling of Environmental Issues in Australia," Handbook of Computable General Equilibrium Modeling, Elsevier.
  4. Thomas Michielsen, 2013. "Brown Backstops Versus the Green Paradox," OxCarre Working Papers 108, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  5. Ivan Diaz-Rainey & Mathias Siems & John K. Ashton, 2011. "The financial regulation of energy and environmental markets," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 19(4), pages 355-369, November.
  6. Yingying Lu & David I. Stern, 2014. "Substitutability and the Cost of Climate Mitigation Policy," CAMA Working Papers 2014-28, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  7. Papageorgiou, Chris & Saam, Marianne & Schulte, Patrick, 2013. "Elasticity of substitution between clean and dirty energy inputs: A macroeconomic perspective," ZEW Discussion Papers 13-087, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Jack Gregory & David I. Stern, 2012. "Fuel Choices in Rural Maharashtra," CCEP Working Papers 1207, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  9. Martin de Wit & Matthew Kuperus Heun & Douglas J Crookes, 2013. "An overview of salient factors, relationships and values to support integrated energy-economic systems dynamic modelling," Working Papers 02/2013, Stellenbosch University, Department of Economics.
  10. Dr. Ulrike Lehr & Dr. Christian Lutz & Kirsten Wiebe, 2011. "Medium Term Economic Effects of Peak Oil Today," GWS Discussion Paper Series 11-3, GWS - Institute of Economic Structures Research.
  11. Lin, Boqiang & Wesseh, Presley K., 2013. "Estimates of inter-fuel substitution possibilities in Chinese chemical industry," Energy Economics, Elsevier, vol. 40(C), pages 560-568.
  12. Antimiani Alessandro & Valeria Costantini & Anil Markandya & Chiara Martini & Alessandro Palma & Maria Cristina Tommasino, 2014. "A dynamic CGE modelling approach for analyzing trade-offs in climate change policy options: the case of Green Climate Fund," SEEDS Working Papers 1614, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jun 2014.

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