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Energy Demand, Substitution and a Potential for Electrification: An econometric analysis of eight Danish subsectors

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  • Møller, Niels Framroze

Abstract

This research contains an econometric analysis of energy demand in trade and industry which allows for substitution between electricity and other energy carriers when relative prices change. Long-run substitution towards electricity is a means of electrifying energy demand and therefore contributes to paving the way for a renewable-based energy sys-tem. For eight subsectors of the Danish economy, time series (1966-2011) are modeled by means of partial Cointegrated VARs. Long-run demand relations are identified for all subsectors and robust price elasticities are supported in five cases. The results are used in a small impulse-response experiment which suggests a potential for taxation to move energy consumption away from fossil-based fuels and towards electricity.

Suggested Citation

  • Møller, Niels Framroze, 2015. "Energy Demand, Substitution and a Potential for Electrification: An econometric analysis of eight Danish subsectors," MPRA Paper 69931, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:69931
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    More about this item

    Keywords

    Energy Demand; Electrification; Energy substitution; Industrial energy consumption; Cointegrated VAR; Electricity demand; Impulse-response analysis.;

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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