The determinants of household energy demand in rural Beijing: Can environmentally friendly technologies be effective?

With the recent rapid economic growth, total energy demand in rural China has increased dramatically, and the energy structure is in the transition from non-commercial to commercial sources. Simultaneously, it is expected that households in rural areas will face energy shortages and additional environmental problems unless they have more access to renewable energy technologies. However, little is known about (i) the transition of energy use patterns and (ii) whether introduced technologies have been effective. To analyze these issues, we estimated the energy demands of rural households by using survey data taken from Beijing's ten suburban districts. The data contain information on both non-commercial and commercial energy use, key characteristics of the households and several renewable energy technologies. Our empirical analysis yielded three main results. First, the per capita income is a key factor in the per capita energy consumption. More specifically, the marginal increase (or marginal change) in per capita coal consumption strongly diminishes (or declines) as per capita income increases. Second, coal and liquefied petroleum gas (LPG) prices do not exhibit substitution effects, but an increase in these prices has strong negative effects on the use of these energy resources. Third, renewable energy technologies are identified to reduce coal consumption and to improve energy efficiency. Overall, these findings suggest a positive perspective: if the Chinese government were to design appropriate policies associated with renewable energy technologies and related energy prices, then coal consumption can be reduced in the near future, and the substitution to cleaner energy use will accelerate. Therefore, a smooth energy transition in rural China could be made in a more environmentally sustainable manner.