Environmental policy, fuel prices and the switching to natural gas in Santiago, Chile
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Date
2007
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Latin American and Caribbean Environmental Economics Program (LACEEP), Turrialba, CR
Abstract
In this study I analyze the pattern of adoption of natural gas in Chile and the drivers behind it.
For doing that I have a panel data set of stationary sources from 1995 to 2005 that allows me
to identify either the role of environmental policy as the impact of the energy cost inducing the
switching to this clean fuel. Besides, I evaluate the performance of the system of environmental
contingencies, a non- traditional policy instrument created in Chile in the early nineties, that
seemed strongly correlated with the switching. According to the data most of the adoption
of natural gas was induced by the lower cost of this fuel, showing that sources were more
sensitive to the cost of energy than to the environmental regulation.
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Working Paper
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Keywords
ENVIRONMENTAL POLICY, ENERGY PRICES, ENERGY SUBSTITUTION, NATURAL GAS, ENVIRONMENTAL EFFECTS, AIR QUALITY, CHILE