Residential willingness to pay for deep decarbonization of electricity supply: Contingent valuation evidence from Hong Kong

Yuk Shing CHENG, Kang Hua Cao, Chi Keung WOO, Adonis YATCHEW

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Abstract

Motivated by the government's proposed target of reducing CO₂ emissions by 30% of the 2005 level in the year 2020, we estimate the residential willingness-to-pay (WTP) for deep decarbonization of Hong Kong's electricity supply, which is heavily dependent on coal-fired generation. Our contingent valuation survey conducted in 2016 of 1460 households yields dichotomous choice data based on the respondents’ answers to a series of closed-ended questions. Such data are less susceptible to the strategic bias that often plagues self-stated WTP data obtained by direct elicitation via open-ended questions. Using binary choice models, we find that average WTP is 48–51%, relative to current bills, if the decarbonization target is achieved via natural gas generation and renewable energy. However, estimated WTP declines to 32–42% when decarbonization entails additional nuclear imports from China. As the projected bill increase caused by the target's implementation is 40%, our WTP estimates support the government's fuel mix policy of using natural gas and renewable energy to displace Hong Kong's coal generation. Copyright © 2017 Elsevier Ltd. All rights reserved.
Original languageEnglish
Pages (from-to)218-227
JournalEnergy Policy
Volume109
Early online dateJul 2017
DOIs
Publication statusPublished - Oct 2017

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Decarbonization
electricity supply
contingent valuation
willingness to pay
Electricity
Natural gas
Coal
natural gas
coal
import
energy

Citation

Cheng, Y. S., Cao, K. H., Woo, C. K., & Yatchew, A. (2017). Residential willingness to pay for deep decarbonization of electricity supply: Contingent valuation evidence from Hong Kong. Energy Policy, 109, 218-227.

Keywords

  • Residential willingness-to-pay
  • Electricity decarbonization
  • Contingent valuation
  • Hong Kong