Abstract
This paper extends prior research on energy inefficiency in China by utilizing a unique shadow price framework allocation in 30 Chinese provinces. We estimate the shadow price for energy input using the framework of production, and use the ratio of the shadow price to the market price to describe energy utilization. Using Chinese provincial-level data from 1998 to 2011, the results of the analysis reveal that shadow prices in China have grown rapidly during the sample period, which signifies that China has improved its performance in energy utilization since 1998. However, there are eighteen provinces whose shadow prices are lower than market prices. This result suggests that energy utilization is at a low level in these provinces and can be improved by a reallocation of inputs.
Highlights
IntroductionAccording to data from the BP Statistical Review of World Energy 2011, the energy intensity ofChina in 2011 was 2.31 tons of oil equivalents per $100 million GDP (current U.S dollars)
According to data from the BP Statistical Review of World Energy 2011, the energy intensity ofChina in 2011 was 2.31 tons of oil equivalents per $100 million GDP
For our analysis of energy efficiency in China, we use the definition of Hu and Wang [1], who define energy efficiency as the ratio of the optimal energy input to actual energy input
Summary
According to data from the BP Statistical Review of World Energy 2011, the energy intensity ofChina in 2011 was 2.31 tons of oil equivalents per $100 million GDP (current U.S dollars). Prior research has demonstrated that China is highly inefficient in energy utilization from multiple political and economic perspectives [1,2]. Prior research has tried to explain the reasons for China’s low energy efficiency from the perspective of economic growth, government behavior, market segmentation and resource allocation [1,2,3]. Energy scarcity refers to the gap between the shadow price of energy inputs and the market price, serving as an important basis for private enterprise to make energy decisions. When the shadow price of energy is not equal to its market price, private enterprise will reallocate energy and other inputs in the production process to maximize profits [4]. Energy scarcity is not just a basis for energy pricing, and an important mechanism to reduce energy consumption and stimulate enterprises to improve energy efficiency
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