Can industrial agglomeration improve energy efficiency? Empirical evidence based on China's energy-intensive industries.

Abstract

With economic growth, China's energy consumption and industrial agglomeration have increased significantly. This paper uses China's provincial-level energy-intensive industries from 2004 to 2017 as the research object and employs a multi-dimensional panel fixed effect model to investigate the impact of industrial agglomeration on energy efficiency and its mechanism. Results show the following: (1) In general, industrial agglomeration and energy efficiency have a significant "inverted U-shaped" relationship, with an inflection point of 3.309. As the degree of agglomeration increases, energy efficiency first increases and then decreases, but the degree of agglomeration does not cross the inflection point. (2) The impact of industrial agglomeration on energy efficiency has regional heterogeneity. In the eastern and central regions, there is no significant non-linear relationship between industrial agglomeration and energy efficiency but a monotonous positive correlation. In the western region, industrial agglomeration has a significant "inverted U-shaped" impact on energy efficiency, with an inflection point of 3.495, but the agglomeration degree is still on the left of the inflection point, suggesting that a moderate increase in agglomeration is conducive to the improvement of energy efficiency. (3) Industrial agglomeration improves energy efficiency by increasing human capital and promoting fixed asset investment. Therefore, this paper argues that the agglomeration of energy-intensive industries in various regions should be increased to improve energy efficiency. However, it is necessary to raise the industrial threshold in the western region to prevent industrial agglomeration from crossing the inflection point.