Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand

Published

Journal Article

We estimate a carbon mitigation cost curve for the U.S. commercial sector based on econometric estimation of the responsiveness of fuel demand and equipment choices to energy price changes. The model econometrically estimates fuel demand conditional on fuel choice, which is characterized by a multinomial logit model. Separate estimation of end uses (e.g., heating, cooking) using the U.S. Commercial Buildings Energy Consumption Survey allows for exceptionally detailed estimation of price responsiveness disaggregated by end use and fuel type. We then construct aggregate long-run elasticities, by fuel type, through a series of simulations; own-price elasticities range from -0.9 for district heat services to -2.9 for fuel oil. The simulations form the basis of a marginal cost curve for carbon mitigation, which suggests that a price of $20 per ton of carbon would result in an 8% reduction in commercial carbon emissions, and a price of $100 per ton would result in a 28% reduction. © 2008 Elsevier B.V. All rights reserved.

Full Text

Duke Authors

Cited Authors

  • Newell, RG; Pizer, WA

Published Date

  • December 1, 2008

Published In

Volume / Issue

  • 30 / 4

Start / End Page

  • 527 - 539

International Standard Serial Number (ISSN)

  • 0928-7655

Digital Object Identifier (DOI)

  • 10.1016/j.reseneeco.2008.09.004

Citation Source

  • Scopus