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Why did China's energy intensity increase during 1998-2006: Decomposition and policy analysis

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  • Zhao, Xiaoli
  • Ma, Chunbo
  • Hong, Dongyue

Abstract

Despite the fact that China's energy intensity has continuously decreased during the 1980s and mostly 1990s, the decreasing trend has reversed since 1998 and the past few years have witnessed rapid increase in China's energy intensity. We firstly conduct an index decomposition analysis to identify the key forces behind the increase. It is found that: (1) the high energy demand in industrial sectors is mainly attributed to expansion of production scale, especially in energy-intensive industries; (2) energy saving mainly comes from efficiency improvement, with energy-intensive sectors making the largest contribution; and (3) a heavier industrial structure also contributes to the increase. This study also makes the first attempt to bridge the quantitative decomposition analysis with qualitative policy analyses and fill the gap between decomposition results and policy relevance in previous work. We argue that: (1) energy efficiency improvement in energy-intensive sectors is mainly due to the industrial policies that have been implemented in the past few years; (2) low energy prices have directly contributed to high industrial energy consumption and indirectly to the heavy industrial structure. We provide policy suggestions in the end.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 3 (March)
Pages: 1379-1388

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Handle: RePEc:eee:enepol:v:38:y:2010:i:3:p:1379-1388

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Keywords: China's energy consumption Industrial policy Energy price policy;

References

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Citations

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Cited by:
  1. Steckel, Jan Christoph & Brecha, Robert J. & Jakob, Michael & Strefler, Jessica & Luderer, Gunnar, 2013. "Development without energy? Assessing future scenarios of energy consumption in developing countries," Ecological Economics, Elsevier, vol. 90(C), pages 53-67.
  2. Zhao, Xiaoli & Yin, Haitao, 2011. "Industrial relocation and energy consumption: Evidence from China," Energy Policy, Elsevier, vol. 39(5), pages 2944-2956, May.
  3. Liang, Sai & Zhang, Tianzhu, 2011. "What is driving CO2 emissions in a typical manufacturing center of South China? The case of Jiangsu Province," Energy Policy, Elsevier, vol. 39(11), pages 7078-7083.
  4. Zhao, Xiaoli & Ma, Qian & Yang, Rui, 2013. "Factors influencing CO2 emissions in China's power industry: Co-integration analysis," Energy Policy, Elsevier, vol. 57(C), pages 89-98.
  5. Li, Fangyi & Song, Zhouying & Liu, Weidong, 2014. "China's energy consumption under the global economic crisis: Decomposition and sectoral analysis," Energy Policy, Elsevier, vol. 64(C), pages 193-202.
  6. De Cian, Enrica & Schymura, Michael & Verdolini, Elena & Voigt, Sebastian, 2013. "Energy intensity developments in 40 major economies: Structural change or technology improvement?," ZEW Discussion Papers 13-052, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Zhang, Daisheng & Aunan, Kristin & Martin Seip, Hans & Vennemo, Haakon, 2011. "The energy intensity target in China's 11th Five-Year Plan period--Local implementation and achievements in Shanxi Province," Energy Policy, Elsevier, vol. 39(7), pages 4115-4124, July.
  8. Tekla Sebestyén Szép, 2013. "Eight Methods for Decomposing the Aggregate Energy Intensity of the Economic Structure," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 9(01), pages 77-84.
  9. Wenzel, Lars & Wolf, André, 2014. "Changing patterns of electricity use in European manufacturing: A decomposition analysis," HWWI Research Papers 150, Hamburg Institute of International Economics (HWWI).
  10. Li, Yi & Sun, Linyan & Feng, Taiwen & Zhu, Chunyan, 2013. "How to reduce energy intensity in China: A regional comparison perspective," Energy Policy, Elsevier, vol. 61(C), pages 513-522.
  11. Herrerias, M.J. & Joyeux, R. & Girardin, E., 2013. "Short- and long-run causality between energy consumption and economic growth: Evidence across regions in China," Applied Energy, Elsevier, vol. 112(C), pages 1483-1492.
  12. Zhang, Jiefeng & Bai, Zhipeng & Chang, Victor W.C. & Ding, Xiao, 2011. "Balancing BEC and IAQ in civil buildings during rapid urbanization in China: Regulation, interplay and collaboration," Energy Policy, Elsevier, vol. 39(10), pages 5778-5790, October.
  13. Steckel, Jan Christoph & Jakob, Michael & Marschinski, Robert & Luderer, Gunnar, 2011. "From carbonization to decarbonization?--Past trends and future scenarios for China's CO2 emissions," Energy Policy, Elsevier, vol. 39(6), pages 3443-3455, June.
  14. Zeng, Lin & Xu, Ming & Liang, Sai & Zeng, Siyu & Zhang, Tianzhu, 2014. "Revisiting drivers of energy intensity in China during 1997–2007: A structural decomposition analysis," Energy Policy, Elsevier, vol. 67(C), pages 640-647.

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