Consumption effects of an electricity decarbonization policy: Hong Kong

This paper estimates the consumption effects of an electricity decarbonization policy’s implementation. For Hong Kong, these effects are decreases in electricity consumption and increases in town gas consumption. Using a sample of monthly data for the period of 1981-2016, we document the low price responsiveness of Hong Kong’s electricity and town gas demands by customer class (residential, commercial and industrial). Hence, the 40% projected electricity rate increase due to Hong Kong’s adopted electricity decarbonization policy may only have a small demand-side impact on CO₂ emissions. Finally, the electricity demands’ low price responsiveness implies: (1) Hong Kong’s demand-side-management should mainly rely on energy-efficiency improvements; and (2) restructuring Hong Kong’s electricity industry should consider the potential for market power abuse aided by price-inelastic electricity demands. Copyright © 2018 EEAA/IEEE/EE One-Day Forum.