Direct and Indirect Effects of Energy-Intensive Industries on Energy Consumption in China

Shimei Wu, Xinye Zheng and Feng Song

Emerging Markets Finance and Trade, 2019, vol. 55, issue 6, 1216-1228

Abstract: In addition to the direct energy consumption during the production process, energy-intensive industries can have indirect effects on energy demand because they are upstream industries and have substantial sectoral linkage across the economy. We quantitatively identify the direct and indirect effects of energy-intensive industries using a two-stage approach. First, we study how aggregate energy consumption responds to economic growth and growth of energy-intensive industries. Next, we study the effects of each energy-intensive industry on economic growth and then calculate the indirect effect of energy-intensive sectors on energy consumption. The results indicate that all six energy-intensive products have strong indirect energy effects, making up 20% to almost 60% of their total effects on energy consumption. The results have important policy implications. With the slowing down growth of energy-intensive industries, we expect that China’s energy consumption is undergoing a structural shift which leads to a much slower growth stage.

Date: 2019
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DOI: 10.1080/1540496X.2018.1447462

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