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

With rapid economic growth, total energy demand in rural China has increased dramatically and its structure is in the transition from non-commercial to commercial energy. At the same time, it is also expected that households in rural areas will face energy shortage and causes more environmental problems without having more access to renewable energy technologies. However, little is still known about (i) the transition of the energy use and (ii) whether the technologies introduced have been effective or not. To analyze these issues, we have estimated energy demands of rural households by utilizing a survey data taken from Beijing's ten suburban districts. The data contains the information of both non-commercial and commercial energy use, key characteristics of the households and several renewable energy technologies. Our empirical analysis reveals three main results. First, the per capita income is a key factor to per capita energy consumption. More speci cally, a rise in per capita coal consumption strongly diminishes as per capita income increases. Second, coal and LPG prices do not exhibit any substitution effect, but an increase in these prices has strong negative effects on their own energy use. Third, the renewable energy technologies are identi ed to reduce the coal consumption and induce more energy efficiency. Overall, these ndings suggest a positive perspective: if the Chinese government could appropriately design policies associated with renewable energy technologies and with the related energy price controls, then coal consumption will be induced to decline in the near future and the substitution effects to cleaner energy use will speed up. This implies that the smooth energy transition in rural China can be made in more environmentally sustainable manners.