Review of key international demand elasticities for major industrializing economies

Abstract

This report conducts a selective review of various estimates for energy demand responses. It emphasizes recent empirical studies that include trends from studies published after 2000. Emphasis is placed on the five major emerging or transitional economies in Brazil, China, India, Mexico and Russia, although other important nations like Chile and South Korea are also discussed when studies are available. The review focuses attention on the long-run responses to changes in prices and income after capital stock turnover has been completed. The terminology often refers to elasticities, or the percentage change in energy use divided by the percentage change in price (or income), holding constant all other factors that could influence energy-use decisions. Most studies have focused upon household and transportation use of liquid fuels; many fewer studies have investigated fuels used by industry or commerce or for electric generation. Based upon the available estimates, price and income elasticities for liquid fuels are generally less than one (unity) for many countries and sectors, except for the long-run income effect for transportation purposes, which can range widely by country between 0.24 and 1.75 while averaging 0.94 for all countries.

Power markets in transition: Decarbonization, energy efficiency, and short-term demand response

“…The contribution of intermittent renewables to emission reductions falls to 49% (compared 35 Note that we define fuel switching as the change in the emission intensity of fossil-fuel-based generation technologies due to switching to fuels with a lower carbon content (either natural gas instead of coal or biomass instead of natural gas) or power plants with a higher conversion efficiency. 36 The mechanism is similar to the finding of Böhringer and Rosendahl [9] that an emission reduction target in combination with a quota for renewables promotes the dirtiest technology, meaning that coal stays and gas leaves the market. In our model, we do not have a green quota but, rather, a central planner investing in energy efficiency.…”

“…As a default assumption, we set the ability to shed demand to the values shown in Table 1. Moreover, as indicated in Huntington et al [36] and Taylor et al [63], the ability to shift (called cross-price elasticity in those works) seems to be moderate in comparison to the ability to shed. Thus, we assume that the abilities to shift occurs in the four previous and subsequent cross-hours and is 10% of the ability to shed (see Table 1).…”

“…20 Regarding the abilities to shed ( s ) and shift demand ( s,s ), we use existing estimates that vary widely depending on the specific sector, country, sample period, and estimation method (see Labandeira et al [46], Jamil and Ahmad [40], Huntington et al [36]). The overview in Huntington et al [36] indicates that the residential sector generally has better ability to shed demand than do the industry, transport, or commercial sectors. This analysis uses estimates from the meta-analysis conducted by Labandeira et al [46].…”

“…To to limit the probability of warming above 2°Celsius, cumulative CO 2 emissions in the period 2000-2050 should not exceed 1,000,000 megatons (Mt), that is, approximately 20,000 Mt each year [51]. In 2017, just two years after the Paris Agreement, annual carbon emission peaked at 36,790 Mt, which is almost double the approximate annual emission budget and, moreover, means that almost half the 1,000,000 Mt budget has already been emitted. Thus, there is doubt as to whether the temperature target can be met.…”

The greenhouse gas effects of increased US oil and gas production

“…Two commonly cited figures come from Dahl [41], who estimates long-run price elasticities of oil demand for developing countries of − 0.13 to − 0.26, and Cooper [42], who estimates elasticities for developed countries from − 0.18 to − 0.45. A review of recent studies in Huntington et al [43] finds that the average demand elasticity across several studies in a variety of nations is − 0.15, with estimates of − 0.25 for the Middle East and − 0.26 for all non-OECD nations. Krupnick et al [44] estimate a median long-run price elasticity of demand for non-US consumption of − 0.5, with a 5th to 95th percentile range of − 0.42 to − 0.61.…”