Publication detail

Price Responsiveness and Carbon Emissions Reductions in the Residential Sector: Evidence from a Natural Experiment in Russia.

Author(s): Salim Turdaliev BSc M.A., Anna Alberini, Milan Ščasný
Type: Article in collection
Year: 2020
Number: 5
ISSN / ISBN: 978-88-942781-9-4
Published in: 5th AIEE Energy Symposium - Current and Future Challenges to Energy Security - Executive Summaries. The Italian Association of Energy Economists (AIEE)
Publishing place: Rome , Italy
Keywords: Residential electricity demand, Transition Economy, Natural Experiment, Increasing block rates, Attentiveness, CO2 emissions reductions.
JEL codes: D12, Q41, Q48
Suggested Citation:
Grants: GAUK 454120 The effect of non-linear tariff on energy demand and investment in electric durables in Transition Economies: Micro data estimation and natural experiment
Abstract: Residential electricity consumption is generally regarded as relatively inelastic with respect to price, which implies that a carbon tax may have limited effectiveness in reducing CO2 emissions from the residential sector and encouraging transition to renewable sources of energy. Do these considerations apply in a country like Russia, where most power is generated from natural gas and coal? In this paper we estimate the price elasticity of residential demand using household-level data from several waves of the Russian Household Budget Survey. We have a panel dataset. We take advantage of the variation in tariffs across regions and over time, and of the introduction of increasing block tariff schemes in a number of regions. We show that in those regions consumers appear to be aware of the block cutoffs, even though the latter are household- and dwelling-specific, to the point that there are a total of 35 different tier cutoffs. Based on these results, we estimate the price elasticity of electricity demand to be around -0.10. We also predict the associated changes in electricity consumption, CO2 emissions, and revenues if the similar IBR polices are implemented countrywide.

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