Abstract
The Chinese government has adopted many policies to save energy and electricity in the chemical industry by improving technology and reforming its electricity market. The improved electricity efficiency and the electricity reform may indirectly reduce expected energy and electricity savings by decreasing the effective electricity price and the marginal cost of electricity services. To analyze the above issues, this paper employs the Morishima Elasticity of Substitution of the electricity cost share equation which is estimated by the DOLS method. The results show that: 1) There exists a rebound effect in the Chinese chemical industry, but it is quite large because the electricity price is being controlled by the government; 2) the reform of the electricity market reduces the rebound effect to 73.85%, as electricity price begins to reflect cost information to some extent; 3) there is still a lot of space for the reform to improve, and the rebound effect could be reduced further once the electricity price is adjusted to transfer the market information more correctly. In order to succeed in saving electricity and decreasing the rebound effect in the chemical industry, the policy implications are provided from perspectives of the improved energy efficiency and electricity pricing mechanism.
Highlights
The 13th 5-year plan of the chemical industry has accomplished the aim of saving energy, in which energy efficiency would increase by 15% and carbon emissions would decrease by 18%, through researching and developing new technology, such as large epoxy ethane reactor and high purity lithium equipment
Because we focus on the rebound effect, the estimation of electricity cost share is listed
The rebound effect is highly correlated with the electricity price elasticity
Summary
The 13th 5-year plan of the chemical industry has accomplished the aim of saving energy, in which energy efficiency would increase by 15% and carbon emissions would decrease by 18%, through researching and developing new technology, such as large epoxy ethane reactor and high purity lithium equipment. It is necessary to save electricity and improve electricity efficiency. Improving electricity efficiency or other energy efficiency means innovating technology for electricity conservation and emissions reduction. The issue has troubled economists for a long time, because empirical studies in the United States suggest that rebound effects (REs) could partially reduce electricity savings. Could electricity saving be achieved by improving electricity efficiency in China? The research on this issue is of great
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