Interfuel substitution in Australia: a way forward to achieve environmental sustainability

Shahiduzzaman, MD and Alam, Khorshed (2014) Interfuel substitution in Australia: a way forward to achieve environmental sustainability. The Australian Journal of Agricultural and Resource Economics , 58 (1). pp. 22-42. ISSN 1364-985X

Abstract

This paper examines the possibilities for interfuel substitution in Australia in view of the need to shift towards a cleaner mix of fuels and technologies to meet future energy demand and environmental goals. The translog cost function is estimated for the aggregate economy, the manufacturing sector and its subsectors, and the electricity generation subsector. The advantages of this work over previous literature relating to the Australian case are that it uses relatively recent data, focuses on energy-intensive subsectors and estimates the Morishima elasticities of substitution. The empirical evidence shown herein indicates weak-form substitutability between different energy types, and higher possibilities for substitution at lower levels of aggregation, compared with the aggregate economy. For the electricity generation subsector, which is at the centre of the CO2 emissions problem in Australia, significant but weak substitutability exists between coal and gas when the price of coal changes. A higher substitution possibility exists between coal and oil in this subsector. The evidence for the own- and cross-price elasticities, together with the results for fuel efficiencies, indicates that a large increase in relative prices could be justified to further stimulate the market for low-emission technologies.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: © 2013 Australian Agricultural and Resource Economics Society Inc. and Wiley Publishing Asia Pty Ltd. Published online 26 Jun 2013. Published version deposited in accordance with the copyright policy of the publisher.
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 04 Jul 2013 23:30
Last Modified: 17 Aug 2015 04:28
Uncontrolled Keywords: demand analysis; energy; environmental policy
Fields of Research : 09 Engineering > 0913 Mechanical Engineering > 091305 Energy Generation, Conversion and Storage Engineering
09 Engineering > 0906 Electrical and Electronic Engineering > 090607 Power and Energy Systems Engineering (excl. Renewable Power)
16 Studies in Human Society > 1605 Policy and Administration > 160507 Environment Policy
09 Engineering > 0906 Electrical and Electronic Engineering > 090608 Renewable Power and Energy Systems Engineering (excl. Solar Cells)
Socio-Economic Objective: B Economic Development > 85 Energy > 8598 Environmentally Sustainable Energy Activities > 859899 Environmentally Sustainable Energy Activities not elsewhere classified
Identification Number or DOI: 10.1111/1467-8489.12017
URI: http://eprints.usq.edu.au/id/eprint/23689

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