IDEAS home Printed from https://ideas.repec.org/p/mee/wpaper/0606.html
   My bibliography  Save this paper

Energy Prices and Energy Intensity in China A Structural Decomposition Analysis and Econometrics Study

Author

Listed:
  • Xiaoyu Shi
  • Karen R. Polenske

Abstract

Since the start of its economic reforms in 1978, China's energy prices relative to other prices have increased. At the same time, its energy intensity, i.e., energy consumption per unit of Gross Domestic Product (GDP), has declined dramatically, by about 70%, in spite of increases in energy consumption. Is this just a coincidence? Or does a systematic relationship exist between energy prices and energy intensity? In this study, we examine whether and how China’s energy price changes affect its energy intensity trend during 1980-2002 at a macro level. We conduct the research by using two complementary economic models: the input-output-based structural decomposition analysis (SDA) and econometric regression models and by using a decomposition method of own-price elasticity of energy intensity. Findings include a negative own-price elasticity of energy intensity, a price-inducement effect on energyefficiency improvement, and a greater sensitivity (in terms of the reaction of energy intensity towards changes in energy prices) of the industry sector, compared to the overall economy. Analysts can use these results as a starting point for China's energy and carbon emission forecasts, which they traditionally conduct in China without accounting for energy-intensity changes. In addition, policy implications may initiate new thinking about energy policies that are needed to conserve China's energy resources and reduce carbon emissions.

Suggested Citation

  • Xiaoyu Shi & Karen R. Polenske, 2006. "Energy Prices and Energy Intensity in China A Structural Decomposition Analysis and Econometrics Study," Working Papers 0606, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  • Handle: RePEc:mee:wpaper:0606
    as

    Download full text from publisher

    File URL: http://tisiphone.mit.edu/RePEc/mee/wpaper/2006-006.pdf
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mee:wpaper:0606. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sharmila Ganguly). General contact details of provider: http://edirc.repec.org/data/cemitus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.