The pattern of household energy transition

Abstract

This study detects the pattern of household energy transition of large countries (population > 10 million) with more than 90% of the world energy consumption. Simultaneous equations are used to capture the multidimensional information of energy mix with panel data from 1990 to 2016. The results indicate the non-linear pattern of the income and energy mix in the household sector. The peaks of coal and oil shares are separately captured. As income develops, the share of coal increases first and then declines, peaking at $4800 (Purchasing Power Parity, constant 2011 international dollars), and the trend of oil share is similar to coal but peaks later at $7100. Economic ascent generally involves a significant substitution away from traditional bioenergy and toward modern fuels such as natural gas and electricity. Except for economic factors, the pattern of the household energy transition is related to urbanization, demographics and resource endowment. In particular, for emerging market countries, households are subjected to aging trends and fossil endowments to increase their dependence on coal and are less likely to climb higher up the energy ladder, at least in the short term.