Abstract:
Within the framework of the COP21 (Conference of the Parties) agreement, Algeria submitted
its Intended Nationally Determined Contribution pledging to reduce carbon emissions by at least 7%
by 2030. However, it will be a difficult task to reach this target as total final energy consumption has
increased 32% from 2010 to 2014, with the major energy increases being related to electricity use in
the residential sector. In this context, the relationship between residential electricity consumption
and income is analyzed for Algeria in the period 1970–2013, by estimating a residential electricity
consumption per capita demand function which depends on GDP per capita, its squared and cubed
terms, the electricity prices, and the goods and services imports. An extended Autoregressive
Distributed Lag model (ARDL) was adopted to consider the different growth patterns registered
in the evolution of GDP. The estimate results show that the relationships between electricity use
and GDP (in per capita terms) present an inverted N-shape, with the second turning point having
been reached. Therefore, promoting growth in Algeria could be convenient to reduce the electricity
consumption, as a higher income level may allow the use of more efficient appliances. Additionally,
renewable energies may be adequate to increase the electricity production in order to cover the
increasing residential demand.
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