Factors Influencing the Choice between Dirty and Clean Energy Sources: Evidence from Pakistan

Abstract

Energy Ladder Hypothesis (ELH) explains the relationship between income and households’ decision to use dirty or clean energy sources for the purpose of cooking, heating, and lightening. Therefore, the underlying research paper aims to estimate the validation of the ELH in Pakistan, moreover, to estimate the other socioeconomic factors which influence the households’ decision to use energy sources. We have used HIES (2018-19). The findings identify that ELH holds in Pakistan, which explains that the increase in income level drives households to shift from dirty energy (firewood, dung cake, charcoal, agriculture waste) utilization to the clean energy sources (electricity, and gas). Moreover, higher quintiles of income are found using cleaner energy sources than the bottom income quintiles. ELH holds by using income quintiles. Other factors such as household characteristics (family size, dependency ratio, education, gender, and locational dwelling) are found influencing the decision to use dirty or clean energy sources.