The driving factors behind coal demand in China from 1997 to 2012: An empirical study of input-output structural decomposition analysis

Abstract

With the rapid development of economy, especially the constant progress in industrialisation and urbanisation, China's energy consumption has increased annually. Coal consumption, which accounts for about 70% of total energy consumption, is of particular concern. Hence, it is crucial to study the driving factors behind coal demand in China. This work uses an input-output structural decomposition analysis (I-O SDA) model to decompose the increments of coal demand in China from 1997 to 2012 into the sum of the weighted average for eight driving factors from three aspects, including: domestic demand, foreign trade and industrial upgrading. Results show that: during the research period, the demand for coal increases by 153.3%, which is increased by 185.4% and 76.4% respectively due to the driving forces of domestic demand and foreign trade; in addition, industrial upgrading can effectively restrain the growth in coal demand with a contribution rate of −108.6%. On this basis, we mainly studied the driving factors of coal demand in six high energy-consuming industries, namely the electrical power, energy processing, metals, mining, building materials and chemical industries. Finally, we proposed targeted policy suggestions for the realisation of energy conservation and emissions reduction in China.