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Hydropower and potential for interfuel substitution: The case of electricity sector in Malaysia

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  • Bello, Mufutau Opeyemi
  • Solarin, Sakiru Adebola
  • Yen, Yuen Yee

Abstract

The electricity sector in Malaysia is dominated by fossil fuels. This has immensely increased the amount of CO2 emissions and other pollutants. The objective of this paper is to investigate the potential for inter-fuel substitution between the four major fuels of coal, gas, oil, and hydropower that are currently being used in the generation of electricity in Malaysia. Using a translog production function, the study adopted a ridge regression procedure to estimate the parameters. The results suggest a potential for substitution among the fuels. Hydropower is observed to be a substitute for other fossils fuels which is an indication that the country can gradually move towards adopting a cleaner fuel in the generation of electricity. We also extended the analysis to Thailand and China to show the consistency of the method when applied to different countries.

Suggested Citation

  • Bello, Mufutau Opeyemi & Solarin, Sakiru Adebola & Yen, Yuen Yee, 2018. "Hydropower and potential for interfuel substitution: The case of electricity sector in Malaysia," Energy, Elsevier, vol. 151(C), pages 966-983.
  • Handle: RePEc:eee:energy:v:151:y:2018:i:c:p:966-983
    DOI: 10.1016/j.energy.2018.03.055
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    References listed on IDEAS

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    Cited by:

    1. Opeyemi Bello, Mufutau & Adebola Solarin, Sakiru & Yee Yen, Yuen, 2018. "Interfuel Substitution, Hydroelectricity Consumption and CO2 Emissions Mitigation in Malaysia: Evidence from a Transcendental Logarithm (trans-log) Cost Function Framework," Working Papers 4, Department of Economics, University of Ilorin.
    2. Russell Tatenda Munodawafa & Satirenjit Kaur Johl, 2019. "Big Data Analytics Capabilities and Eco-Innovation: A Study of Energy Companies," Sustainability, MDPI, Open Access Journal, vol. 11(15), pages 1-21, August.
    3. Mikidadu Mohammed, 2020. "Green Tax Shocks and Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 302-318.

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