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What factors lead to the decline of energy intensity in China's energy intensive industries?

Ruipeng Tan and Boqiang Lin ()

Energy Economics, 2018, vol. 71, issue C, 213-221

Abstract: This paper seeks to investigate the main factors causing the decline in energy intensity of China's energy intensive industries. Index Decomposition Analysis and Production Decomposition Analysis methods are combined to complete the decomposition analysis. Overall, seven factors are related to the decline in the energy intensity and technology improvement effect is the most significant factor. Technical efficiency effect is positively related to the decline in twelve provinces but negatively related in seventeen provinces. Capital-energy substitution effect is beneficial to the decline in twenty provinces. Labor-energy substitution effect undermines the decline and substitution effect among different categories of energy can be ignored. Considering provincial contribution, only Xinjiang Province has a negative contribution. Liaoning, Hebei and Shanghai provinces make the largest contributions to the decline in energy intensity. The main policy implications include enhancing investments in research and development in China's energy intensive industries; transforming the intensive development model of the energy intensive industries; gradually reforming energy price; and improving the layout of energy intensive industries.

Keywords: China's energy intensive industries; Energy intensity; Technology improvement; Factor substitution; Index decomposition analysis; Production decomposition analysis (search for similar items in EconPapers)
JEL-codes: O13 P18 P28 L69 P23 Q00 (search for similar items in EconPapers)
Date: 2018
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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