Switching to green electricity: Spillover effects on household consumption
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Date
2018
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Abstract
One way to reduce emissions from the consumption of electricity is switching to
green electricity suppliers. This paper identifies the determinants of adopting green electricity
and the effect on electricity consumption, using panel data on more than 9,000
households. To control for potential self-selection into green electricity tariffs, an endogenous
dummy treatment effects model is estimated. The results suggest that wealthier
and better-educated households are more likely to adopt green electricity. Moreover, we
find that switching to green electricity decreases electricity consumption and households
supplied by green electricity are less price-responsive. Consequently, enforcing higher
prices for conventional electricity might prove effective in reducing both greenhouse gas
emissions and electricity consumption at the household level.
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Keywords
electricity demand,, price elasticity, difference-in-differences, endogenous treatment