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Substitute or complement? Assessing renewable and non-renewable energy in OCED countries

Author

Listed:
  • Surender Kumar

    (Department of Business Economics, University of Delhi)

  • Hidemichi Fujii

    (Faculty of Environmental Studies, Nagasaki University)

  • Shunsuke Managi

    (Graduate School of Environmental Studies, Tohoku University)

Abstract

The elasticity of inter fuel substitution between renewable and non-renewable energy is key to establishing effective climate change policy. This is the first study to estimate the elasticity of substitution between different fossil fuels and renewable resources. We used twelve manufacturing industry-level datasets for the OECD countries from 1995 to 2009. We found a complementary relationship from non-renewable energy to renewable energy in eight industries, whereas a substitute relationship was maintained for four industries. In particular, the food and pulp industries had a strong complementary relationship.

Suggested Citation

  • Surender Kumar & Hidemichi Fujii & Shunsuke Managi, 2014. "Substitute or complement? Assessing renewable and non-renewable energy in OCED countries," Working Papers SDES-2014-8, Kochi University of Technology, School of Economics and Management, revised Oct 2014.
    • Handle: RePEc:kch:wpaper:sdes-2014-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Fossil fuels; Renewable energy; Morishima elasticity of substitution; Directional distance function; shadow price of CO2; OECD countries;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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