How Much Does Increasing Non fossil Fuels in Electricity Generation Reduce Carbon Dioxide Emissions?
Many international organizations have called for an increased usage of renewable energy as a means to reduce CO2 emissions and address climate change. This paper uses a large panel data set of 93 countries and recently developed panel estimation techniques to answer the question by how much does increasing non fossil fuels in electricity generation reduce the subsequent carbon dioxide emissions. For the full sample, we find long run displacement elasticities for non fossil fuel consumption per capita of approximately 0.38; however, for the share of non fossil fuels used in electricity generation, those long run displacement elasticities are 0.82. Thus, a one percent increase of the share of non fossil fuel electricity generation reduces CO2 emissions per capita from electricity generation by about 0.82% Long run share displacement elasticities for non OECD countries are substantially higher than those for OECD countries (approximately 0.98 to 0.54) These results have a number of policy implications. Our results are important in establishing that a very rapid increase in the share of non fossil fuels used in electricity generation is needed in order to have a meaningful impact on per capita CO2 emissions from electricity generation.