Abstract
As the largest energy consumer, China is facing greater pressure to guarantee energy supply and energy security. Investigating the driving factors of energy consumption is very important. Decomposition analysis is an analytical tool for decomposing an aggregate indicator into its contributing factors. This paper introduces index decomposition analysis (IDA) into production decomposition analysis (PDA) and provides a new decomposition framework for analyzing energy consumption. Two application studies are presented to illustrate the use of our proposed approach. The first deals with the decomposition of aggregate energy consumption from 1991 to 2012; the second application studies seven sectors of China from 2001 to 2012. The empirical studies result in four meaningful findings: (1) the rapid economic growth has already resulted in severe energy supply crises; (2) China’s energy sector consumption structure has changed significantly; (3) potential economic effect is the largest driving factor for energy consumption growth; (4) potential energy intensity effect and technical change of economic output effect were the two primary driving factors in reducing energy consumption.
Highlights
China’s economy has grown rapidly in the past three decades, which has resulted in severe environmental pollution and an acute shortage of energy supply
I,j ij where t is the time in years; Et is the energy consumption in time t; the subscript i represents industrial sector; the subscript j represents fuel type; Eit denotes energy consumption of the ith sector in time t; Eitj denotes energy consumption of the ith sector based on j fuel type in time t; Eitj/Eit is the share of the jth energy form to i sector total energy consumption in year t; Eit/Et is the share of the ith sector energy consumption to the total in time t; Yt denotes the Gross Domestic Production (GDP) in year t; Et/Yt is the total energy intensity in year t
Statistics data shows that oil is the main energy import in China, with import dependency increasing rapidly from 7.5% in 1993 to 6600..66%% in 2012
Summary
China’s economy has grown rapidly in the past three decades, which has resulted in severe environmental pollution and an acute shortage of energy supply. Its energy consumption rose from 1037.8 Mtce (million tons of coal equivalent) in 1991 to 3617.3 Mtce in 2012, representing an annual average growth rate of 6.1%. According to the Statistical Review of World Energy 2012, China has replaced the US as the largest energy consumer, contributing to 20.3% of global energy consumption. In order to impel the sustained economic growth and the construction of a resource conserving and environment friendly society, China’s 12th five-year plan, launched in 2011, stipulated that all government divisions must reduce energy consumption and primary pollution. There is a great practical significance to investigate the driving forces dominating China’s energy consumption levels
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