Threshold Effect of Economic Growth on Energy Intensity—Evidence from 21 Developed Countries

Jinjin Zhou,Chang Li,Zenglin Ma,Taoyuan Wei

doi:10.3390/en14144199

Abstract

Based on threshold regression models, this paper analyzes the effect of economic growth on energy intensity by using panel data from 21 developed countries from 1996 to 2015. Results show that a 1% increase in GDP per capita can lead to a 0.62–0.78% reduction in energy intensity, implying economic growth can significantly reduce energy intensity. The extent of the reduction in energy intensity varies depending on the economic development stages represented by key influencing factors including energy mix in consumption, urbanization, industrial structure, and technological progress. Specifically, the reduction in energy intensity due to economic growth can be enhanced with relatively more renewable energy consumption and more urban population until a threshold point, where the enhancement disappears. On the other hand, the extent of the energy intensity reduction due to economic growth can be weakened with relatively more tertiary industry activities and more research and development (R&D) investment in an economy until a threshold point, where the weakening cannot continue. However, compared to the early stages represented by the low ends of renewable energy consumption, urban population, tertiary industry activities, and R&D investment, the later stages represented by the high ends of these key factors after a threshold show the weakened effect of economic growth on the decline of energy intensity. Hence, when an economy is well-developed, policy makers are advised to put fewer expectations on the role of economic growth to reduce energy intensity, while pursuing relatively cleaner energy, greater urbanization, more tertiary industry activities, and advanced technologies.

Highlights

Energy is one of the key driving forces for sustainable economic development
They show that the estimated coefficient of per capital gross domestic product (GDP) always has negative values in all the threshold regression models, which are significant at the 1% level
A 1% increase in GDP per capita can lead to a 0.62–0.78% reduction in energy intensity, implying economic growth can significantly reduce the energy intensity, the effect is not one-to-one, probably due to a rebound effect caused by relatively lower energy prices [47]

Summary

Introduction

Energy is one of the key driving forces for sustainable economic development. In the face of resource depletion and environmental carrying-capacity limits, reducing energy input while keeping economic growth is important for sustainable development in economic, social, and environmental fields. With the aggravation of the contradiction between energy demand and the prominent pressure of environmental protection, the appeal for energy conservation and emission reduction is increasingly higher, and the pursuit of green and sustainable economic development has become the goal of almost all countries. In the process of the world’s transition to sustainable green and low-carbon development, it is difficult for the global energy system to eliminate its dependence on fossil energy in the short term. To achieve long-term and green economic growth, China has announced targets to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. A correct understanding of the characteristics of energy intensity (i.e., the ratio of energy use per economic output) at different stages of economic development is necessary for countries like China to formulate energy-saving and emission-reduction policies in both the short and long term

Objectives

Results

Conclusion