Price and Income Elasticities of Hungarian Household Energy Demand: Implications for Energy Policy in the Context of the Energy Crisis
Journal Title: Green and Low-Carbon Economy - Year 2024, Vol 2, Issue 3
Abstract
The energy crisis that began in the second half of 2021, exacerbated by the Russian-Ukrainian war, created unexpected difficulty for European Union Member States in terms of shaping their energy policies. Hungary was one of the most vulnerable countries, whose economic development was fraught with severe risk due to the strong dependence on Russian energy sources and regulated energy prices for households, significantly slowing down the transition to green energy. The sharp change in energy prices due to the introduction of a price cap in 2013-2014 and the partial adjustment in 2022 draws attention to the situation of Hungarian energy demand. This study describes the absolute short-term price elasticities of Hungarian household natural gas and electricity demand and gas and electricity cross-price and income elasticities of the former for income deciles between 2010 and 2021 using the midpoint percentage method. The results show that electricity demand is more elastic than gas demand, implying that Hungarian household consumers are more responsive to changes in electricity prices than those of gas. In addition, low-income Hungarian households are more sensitive to changes in both of the latter than high-income households, while no consistent pattern is identified in the relationship between income and energy demand. Accordingly, the study recommends the implementation of a multi-tariff pricing strategy based on the energy burden of the income deciles. This should particularly target the first two deciles, which are the most vulnerable and sensitive to energy price changes.
Authors and Affiliations
Tekla Szép, Mohammad Kashour
Keywords
Related Articles
- EP ID EP740593
- DOI 10.47852/bonviewGLCE32021155
- Views 44
- Downloads 1
Does the Carbon Emissions Trading Scheme Improve Carbon Total Factor Productivity? Evidence from Chinese Cities
Improving carbon total factor productivity (CTFP) is required for China’s sustainable development, and the carbon emission trading scheme (ETS) is crucial to achieving this goal. In this paper, we calculate the city CTFP...
The Climate Policy of the Member States of the Eurasian Economic Union: Synchronizing with the Global Climate Change Agenda
The paper deals with the climate agenda in the Eurasian Economic Union. Particularly, it analyzes the current stage of implementation of green finance principles in the member states of the EAEU. In the article, the auth...
Carbon Farming: Nature-Based Solutions in Brazil
Agriculture can breach the emission gap between countries' and companies' declared goals and actual achievements related to carbon neutrality. But to do so, techniques must change from the monocultural to more integrated...
Sustainability of Renewable Energy Options as Compared to Coal-Fired Power Plants in Pakistan
Though frequent availability of energy is vital for economic growth, using any energy source can have a certain degree of impact on the environment. Pakistan is facing the worst power crisis nowadays. The government of P...
Innovative Production Efficiency in Chinese High-Tech Industries During the 13th Five-Year Plan Considering Environmental Factors: Evidence from a Three-Stage DEA Model
Innovative production in high-tech industries is seen as a promoter of corporate profitability and a driver of China's economic growth. However, some scholars point out that high-tech industry is in its infancy and has i...