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Selected Development Project
Project Title

Price Elasticities of Electricity and Gas Demands by End-use Customer Class in Hong Kong

Principal Investigator Professor WOO Chi Keung
Area of Research Project
Public Policy Research
Project Period
From 10/2016 To 03/2018
  1. To estimate Hong Kong’s price elasticities of demand for electricity and town gas for three end-use customer classes: residential, commercial and industrial.
  2. To use the estimates thus obtained to address public policy questions in connection to Hong Kong‘s electricity future in the next 30 years.
  3. To publish papers on the key findings, which can be used for courses on energy economics and energy policy.
Methods Used
The project uses a regression model to analyse the monthly price and consumption data for electricity and town gas, thereby obtaining price elasticity estimates by customer class.
Summary of Findings

  • The project uses the elasticity estimates to assess the customer class’ electricity demand reductions due to the 40% projected electricity rate increase caused by the Hong Kong Government’s fuel mix policy. As less electricity will be generated, the Hong Kong electricity industry’s CO2 emissions will decline as well.
  • Because electricity and town gas are substitutes, the same 40% electricity rate increase is expected to increase customer class’ town gas consumption, which will in turn raise Hong Kong’s CO2 emissions.
  • The net demand-side effect of the 40% electricity rate increase is a small reduction in Hong Kong’s total CO2 emissions.
  • The project’s findings show that a fuel mix policy designed to reduce the Hong Kong electricity industry’s CO2 emissions tends to reduce electricity demands but increase town gas demands by customer class.
  • Such demand changes are useful in determining the fuel mix policy’s effectiveness in cutting Hong Kong’s CO2 emissions. Hence, the project has the intended outcome of informing Hong Kong’s fuel mix policy debate.
Selected Output
Woo, C.K., A. Shiu, Y. Liu, X. Luo and J. Zarnikau (2018). Consumption effects of an electricity decarbonization policy: Hong Kong. Energy, 144, 887-902.
Biography of Principal Investigator

Professor Woo Chi Keung is a Professor of the Department of Asian and Policy Studies (APS) at The Education University of Hong Kong (EdUHK). With over 30 years of industry experience, Professor Woo has published over 150 refereed articles in such journals as Quarterly Journal of Economics, Journal of Public Economics, Economics Letters, Journal of Business Finance and Accounting, Pacific Basin Finance Journal, OMEGA, Applied Energy, Energy, Energy Economics, The Energy Journal, Energy Policy and IEEE Transactions on Power Systems. His research areas include energy economics and applied microeconomics.

Funding Source

General Research Fund