Fuel choice and the demand for natural gas in Western European households

The paper presents an econometric model for analysing natural gas demand for space heating in the residential sector in Weste rn Europe. A discrete-continuous • dynamic choice model is specified. Households' decisions on energy consumption are viewed as carried out in two steps: In the first step they choose between a limited number of fuel systems. Given this choice a decision is made on how intensively the energy equipment should be utilised. The model is estimated from data on energy use and dwelling stock in seven European countries, organised in a database at Lawrence Berkeley Laboratory, Berkeley, USA. The results yield rather reasonable estimates on price and income elasticities of gas demand, but the effect on demand from conversions are found to be rather moderate