Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand
Abstract
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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Journal articlePermalink
https://hdl.handle.net/10161/7456Published Version (Please cite this version)
10.1016/j.reseneeco.2008.09.004Publication Info
Newell, RG; & Pizer, WA (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.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Richard G. Newell
Adjunct Professor
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
Billy Pizer
Research 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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