Decoupling, decomposition and forecasting analysis of China's fossil energy consumption from industrial output

Abstract

Abstract Industries are a major fossil energy consumer and economic development contributor in China. The Chinese government is performing the industrial reforms to diminishing the dependence of industrial output on fossil energy consumption. To guide the present industrial policy adjustment, this study employs the Tapio decoupling index, a structural decomposition algorithm, a hybrid forecasting model, and industry-related data from 2001 to 2014 to evaluate, decompose and forecast the relationship between China's industrial output and fossil energy consumption. Empirical results show that the decoupling index of fossil energy consumption from the value added by China's industry was less than 0 in 2015. Consequently, the industrial fossil energy consumption reached its peak at that time and will gradually decrease in the future, even though the added value continuously increased. The mitigation goals set by the Chinese government for industrial fossil energy intensity by 2020 are expected to be achieved ahead of schedule. The attainment of these goals will strongly support the realization of China's fossil energy-related prospects for 2030. To reduce industrial fossil energy consumption, China should develop strategies for non-fossil energy electricity generation, implement electricity price bidding, prevent overheated investments to real estate and infrastructure, and eliminate backward capacity and establish market-access rules for acetic acid, calcium carbide, ethyl alcohol, and dimethyl ether.