As the manufacturing industry is one of the largest contributors to global emissions, decarbonization of the production line is a key aspect in the fight against climate change. In this study, we examine the level of substitutability between fossil fuel and electricity. Using data on Japanese plants from 2004 to 2020, we estimate the elasticity of substitution between the two inputs and find that a 1 % increase in electricity prices results in a 6.55 % increase in fossil fuel consumption. Our paper also contributes to explaining mechanisms behind inter-fuel substitution, with a special focus on electricity and fossil fuel through cogeneration. We find that substitutability is highly sector-dependent, and identify the pulp & paper, iron & steel, chemicals and cement to be sectors with substitution capacity. These sectors see an increase in their electricity generation, the magnitude of which is estimated between 0.004 % (cement) to 0.23 % (iron & steel). Iron & steel and cement also increase their consumption of coal to power generators by 0.06 % and 0.005 %, respectively. Our findings suggest the need for taxation of both fuel and electricity together, to discourage further substitution attempts that would hinder decarbonization efforts.

中文翻译：

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购买还是生成？日本制造工厂的燃料间替代和发电分析


由于制造业是全球排放的最大贡献者之一，因此生产线的脱碳是应对气候变化的一个关键方面。在这项研究中，我们研究了化石燃料和电力之间的可替代性水平。使用 2004 年至 2020 年日本发电厂的数据，我们估计了两种投入之间的替代弹性，发现电价每上涨 1%，化石燃料消耗量就会增加 6.55%。我们的论文还有助于解释燃料间替代背后的机制，特别关注通过热电联产实现的电力和化石燃料。我们发现可替代性高度依赖于行业，并确定纸浆和纸张、钢铁、化学品和水泥是具有替代能力的行业。这些行业的发电量有所增加，其幅度估计在0.004%（水泥）到0.23%（钢铁和钢铁）之间。钢铁和水泥也分别增加了0.06%和0.005%的煤炭消耗。我们的研究结果表明，需要对燃料和电力一起征税，以阻止阻碍脱碳努力的进一步替代尝试。