Substitutability between clean and dirty electricity generation under a clean transition

Crawford School of Public Policy
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Event details

PhD Seminar (Econ)

Date & time

Friday 14 May 2021


Weston Theare, Level 1, JG Crawford Building 132, Lennox Crossing, ANU


Tony Wiskich

The elasticity of substitution between wind and solar inputs and dirty inputs in electricity is estimated to be around 3 or 4 by fitting an aggregate production function to panel data. A high elasticity is consistent with detailed electricity models which also predict that the substitutability decreases as the share of clean inputs rises, as integrating intermittent energy supply becomes increasingly difficult. A simple dispatch model of electricity generation demonstrates this characteristic. Decreasing substitutability implies higher costs of a clean transition, greater costs from regions transitioning sequentially rather than together, and a greater role for carbon taxes over research subsidies.

Updated:  25 September 2021/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team