Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand
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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.
Published Version (Please cite this version)10.1016/j.reseneeco.2008.09.004
Publication InfoNewell, Richard G; & Pizer, William Aaron (2008). Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand. Resource and Energy Economics, 30(4). pp. 527-539. 10.1016/j.reseneeco.2008.09.004. Retrieved from https://hdl.handle.net/10161/7456.
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Dr. Richard G. Newell is the President and CEO of Resources for the Future (RFF), an independent, nonprofit research institution that improves environmental, energy, and natural resource decisions through impartial economic research and policy engagement. From 2009 to 2011, he served as the administrator of the US Energy Information Administration, the agency responsible for official US government energy statistics and analysis. Dr. Newell is an adjunct professor at Duke University, where he
Professor in the Sanford School of Public Policy
Billy Pizer joined the faculty of the Sanford School of Public Policy at Duke University in the fall of 2011. He also was appointed a faculty fellow in the Nicholas Institute for Environmental Policy Solutions, a nonpartisan institute at Duke that focuses on finding solutions to some of the nation's most pressing environmental challenges. His current research examines how we value the future benefits of climate change mitigation, how environmental regulation and climate policy can af
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