Non-linear Dynamics of Household Natural Gas Use: Environmental and Demographic Challenges in the Energy Transition

Abstract

Nonlinearities cause fuzziness and vagueness, characteristics that energy policy makers wish to downsize if not eliminate. This study investigates the existence of nonlinear relationship between gas demand and its main determinants. To this end, the study applies nonparametric and semi-parametric panel data model on a large panel of OECD countries over the period 1980-2024. The analysis demonstrates the existence of a non-linear relationship between gas demand and its main determinants. The inverted-U hypothesis is totally confirmed in the case of population density and urbanization. This study also finds that the negative impact of the environmental policy stringency on natural gas use is very strong in the long term. Finally, a positive relationship exists between elderly population and the use of gas as the curve is revealing a positive trend. Based on the empirical evidence this analysis emphasizes on the proper implementation of the undertaken environmental and demographic policies towards the sustainable development agendas.