1. Brant Liddle ESI, Singapore Perry Sadorsky York University, Canada
How much does increasing non-fossil fuels in electricity generation reduce carbon dioxide emissions?
Brant Liddle
ESI, Singapore
Perry Sadorsky
York University, Canada

2. Motivation York (2012) Nature Climate Change
Do alternative energy sources displace fossil fuels?
OLS regressions, World Bank data , 130 countries (unbalanced)
LHS: energy/electricity from fossil fuel sources
RHS: energy/electricity from non-fossil fuel sources

3. York (2012)
Fossil fuel electricity production p.c.
Fossil fuel energy use p.c.
Displacement coeff. non-fossil fuel energy p.c.
-0.089*
-0.079*
-0.128*
-0.219*

4. Motivation UN Sustainable Energy for All:
Double share of renewable energy in the global mix by 2030
Asia-Pacific Economic Cooperation economies:
Double the 2010 share of renewables in energy supply by 2030
North America Leader’s Summit:
50% clean power generation by 2025 in N.A.

5. Prior Work
Estimated emissions offset from wind generated electricity, analyzing Texas generator-based data
Cullen 2013, Am Econ J Econ Policy
Novan 2015, Am Econ J Econ Policy
All non-fossil fuels
Developing countries

6. Models

7. Data IEA data, 117 countries, 1971-2011
Unbalanced, all countries w/ at least 20 observations

8. Variables CO2 emissions per capita from electricity & heat generation
Real GDP per capita (PPP)
Electricity consumption per capita from nuclear & renewable sources
Share of electricity output generated from nuclear & renewable sources

9. Prices Real index of natural gas for industry & households
Real index of coal for industry & households
OECD countries,
Unbalanced: 23 countries for natural gas & 16 countries for coal

10. Methods Common correlated effects mean group estimator (CMG)
Heterogeneous
Robust to
Nonstationarity, cointegration, breaks, serial correlation
Mitigate cross-sectional correlation

11. Pretests Pesaran CD Test Pesaran CIPS Panel Unit Root Test
Independence rejected for all variables
Absolute value correlation coefficient:
Pesaran CIPS Panel Unit Root Test
GDP per capita I(1)
Other variables inconclusive

12. Results: Non-fossil Fuels P.C.
Full (117)
OECD (34)
Non-OECD (83)
Short-run
CO2 p.c. (-1)
0.49
[ ]
0.59
[ ]
[ ]
GDP p.c.
0.51
[ ]
0.30
[ ]
0.27
[ ]
Non-fossil fuels p.c.
-0.17
[ ]
-0.11
[ ]
-0.13
[ ]
Long-run
1.01
[ ]
0.72
[ ]
0.94
[ ]
-0.34
[ ]
-0.26
[ ]
-0.35
[ ]

13. Results: Non-fossil Fuels P.C.
Full (117)
OECD (34)
Non-OECD (83)
Short-run
CO2 p.c. (-1)
0.49
[ ]
0.59
[ ]
[ ]
GDP p.c.
0.51
[ ]
0.30
[ ]
0.27
[ ]
Non-fossil fuels p.c.
-0.17
[ ]
-0.11
[ ]
-0.13
[ ]
Long-run
1.01
[ ]
0.72
[ ]
0.94
[ ]
-0.34
[ ]
-0.26
[ ]
-0.35
[ ]

14. Results: Share Non-fossil Fuels
Full (117)
OECD (34)
Non-OECD (83)
Short-run
CO2 p.c. (-1)
0.46
[ ]
0.52
[ ]
0.44
[ ]
GDP p.c.
0.39
[ ]
0.31
[ ]
0.37
[ ]
Share non-fossil fuels
-0.40
[ ]
-0.22
[ ]
-0.47
[ ]
Long-run
0.71
[ ]
0.66
[ ]
[ ]
-0.73
[ ]
-0.46
[ ]
-0.84
[ ]

15. Results: Share Non-fossil Fuels
Full (117)
OECD (34)
Non-OECD (83)
Short-run
CO2 p.c. (-1)
0.46
[ ]
0.52
[ ]
0.44
[ ]
GDP p.c.
0.39
[ ]
0.31
[ ]
0.37
[ ]
Share non-fossil fuels
-0.40
[ ]
-0.22
[ ]
-0.47
[ ]
Long-run
0.71
[ ]
0.66
[ ]
[ ]
-0.73
[ ]
-0.46
[ ]
-0.84
[ ]

16. CO2 p.c. (-1)
GDP p.c.
Share non-fossil fuels
Non-fossil fuels p.c.
Coal price
Natural gas price

17. Summary/Conclusions
Large literature on relationship between energy consumption & CO2 emissions
Smaller literature on negative relationship between renewable & nuclear energy consumption and CO2 emissions
But, little work on estimating displacement effect on CO2 emissions from increasing share of non-fossil fuel consumption

18. Summary/Conclusions
Increasing consumption of non-fossil fuels has only a moderate impact on reducing carbon emissions
Increasing the share of non-fossil fuels in electricity has substantial impact on reducing carbon emissions
That displacement effect is substantially/significantly larger in non-OECD countries than OECD countries

19. Summary/Conclusions Considered natural gas & coal prices
OECD countries only (only 23 & 16 countries, respectively)
Price elasticities small & often insignificant

20. Summary/Conclusions USAEE Working Paper No. 15-215
USAEE/IAEE Working Paper Series
Kevin Forbes
USAEE Working Paper Series Coordinator