Unraveling the effect of domestic and foreign trade on energy use inequality within China

Abstract

Trade allows regions to exchange goods and services domestically and internationally, resulting in significant shifts in energy usage. However, what remains unclear is how these shifts affect the inequality in energy use. Gaining insights into the relationship between trade and energy use inequality is essential for informed policymaking aimed at promoting equitable and inclusive energy accessibility. Taking China as an example, this study provides the first investigation into the effect of both domestic and foreign trade on energy use inequality and critical strategies to further address this inequality. Using multi-scale input-output modelling, this study explores embodied energy use of China's provinces along regional, national, and global supply chains. The Gini coefficient is employed to determine the degree of energy use inequality, and to uncover the effect of domestic and foreign trade on this inequality. Furthermore, a decomposition analysis is performed to identify key pathways towards more balanced energy use. Results show that China's inland provinces have higher energy use originating from local inputs, while coastal provinces top the list regarding energy use embodied in domestic and foreign imports. With the help of trade, China's interprovincial inequality in energy use is reduced by 65.84%. To further lessen energy use inequality, particular attention should be given to domestic trade, especially for the sectors of Construction, Manufacturing, and Service.