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

Publication ,  Journal Article
Newell, RG; Pizer, WA
Published in: Resource and Energy Economics
December 1, 2008

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.

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Published In

Resource and Energy Economics

DOI

ISSN

0928-7655

Publication Date

December 1, 2008

Volume

30

Issue

4

Start / End Page

527 / 539

Related Subject Headings

  • Strategic, Defence & Security Studies
  • 3801 Applied economics
  • 1505 Marketing
  • 1403 Econometrics
  • 1402 Applied Economics
 

Citation

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Newell, R. G., & Pizer, W. A. (2008). Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand. Resource and Energy Economics, 30(4), 527–539. https://doi.org/10.1016/j.reseneeco.2008.09.004
Newell, R. G., and W. A. Pizer. “Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand.” Resource and Energy Economics 30, no. 4 (December 1, 2008): 527–39. https://doi.org/10.1016/j.reseneeco.2008.09.004.
Newell, R. G., and W. A. Pizer. “Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand.” Resource and Energy Economics, vol. 30, no. 4, Dec. 2008, pp. 527–39. Scopus, doi:10.1016/j.reseneeco.2008.09.004.
Journal cover image

Published In

Resource and Energy Economics

DOI

ISSN

0928-7655

Publication Date

December 1, 2008

Volume

30

Issue

4

Start / End Page

527 / 539

Related Subject Headings

  • Strategic, Defence & Security Studies
  • 3801 Applied economics
  • 1505 Marketing
  • 1403 Econometrics
  • 1402 Applied Economics