The effects of country wealth on the energy mix

Abstract

The total investments in the global energy system amounted to 1.85 trillion in 2018 [1]. Globally over 400 exajoule [2] was provided to energy consumers. The energy consumption is closely related to the emission of green house gasses [3] [4] [5]. In the Kyoto and Paris agreements the international community formalized the intention to reduce the emission of green house gasses in an effort to mitigate global warming [6] [7]. Economic progress has long been linked to increased energy consumption [8] [9]. Mitigation of green house gasses whilst facilitating economic growth poses one of the major challenge of the twenty first century [10] [11]. Development of climate policy and business strategy that facilitates both the mitigation of global warming and economic growth requires understanding of the energy market. In an effort to expand the understanding of the energy market we examine the historic effects of a country’s wealth on the country’s energy mix by applying a multinomial logit choice model for energy carriers to various sectors on a global scale. We find evidence for ordered wealth effects in sector categories Heavy Industry, Agriculture & Other Industry, Passenger Transport Rail, Freight Transport Rail, Residential Heating & Cooking, and Services.