Energy Intensity Targets Research Articles

Exploring a pathway to optimise the carbon tax policy in terms of the economy, the environment and health: A scenario-based system dynamics approach

The carbon tax, a pivotal policy instrument in tackling climate change, holds the potential to significantly influence the development of society. To comprehensively analyse the effectiveness of the policy on carbon taxation and explore its possible optimisation path, this study utilizes system dynamics theory to establish a simulation model. A detailed analysis and evaluation of this policy is then conducted from the perspectives of the economy, the environment, and health. To guarantee the precision of the simulation model, a new, comprehensive evaluation method is proposed, which can test the degree of fit of the relative trend and absolute data of the simulation model with reality. The findings reveal that, despite its negative economic implications, a carbon tax policy has positive ramifications for the environment, energy, health, industrial structure, and carbon intensity targets. Furthermore, the synergistic reinforcement effect of R&D and new energy support policies on carbon taxation surpasses the impact of any individual policy alone. Notably, the influence of auxiliary policies has a temporal difference on this policy. Based on these insights, the study concludes with practical policy recommendations.

The CO2 Capture System with a Swing Temperature Moving Bed

Abstract The reduction in CO2 emissions is now a very popular topic. According to the International Energy Agency, CO2 emitted in 2021 was 6% more than that emitted in 2020. Carbon capture and storage (CCS) is gaining popularity as a possible solution to climate change. Experts estimate that industry and power plants will be responsible for 19% of total CO2 emissions by 2050. This paper presents the design of a semi-industrial-scale system for CO2 capture based on the moving bed temperature swing adsorption technology. According to the results of laboratory tests conducted by the SINTEF industry, this technology demonstrates high capture efficiency (>85%). The CO2 capture medium involved in adsorption is activated carbon passing through individual sections (cooling, heating, adsorption), where CO2 is bonded and then released. The heat and mass transfer processes are realised on the developed stand. The heat exchangers use steam and water as the heating/cooling medium. The paper reviews the existing solutions and describes the developed in-house design of heat exchangers that will ensure heat transfer conditions being a trade-off between economic and efficiency-related issues of the CO2 capture process. The designed test stand will be installed in a Polish power plant and is expected to meet the method energy intensity target, set at ≤ 2.7 MJ/kg CO2, with a capture efficiency exceeding 85%. The aim of the work was to develop and solve technical problems that would lead to the construction of a CO2 capture station with parameters mentioned above. This stand uses an innovative method where CO2 is captured by contacting the fluid (gases) with solid particles. The heat exchange associated with the heating and cooling of the adsorbent had to be solved. For this purpose, heat exchangers were designed with high thermal efficiency and to prevent the formation of mounds.

Do energy intensity reduction targets promote renewable energy development? Evidence from partially linear functional-coefficient models

Energy intensity reduction targets can reduce fossil fuel consumption and excessive pollution emissions by developing renewable energy, as some existing studies suggest. Nonetheless, the contradiction that China's ecological environment has still been severely damaged after setting energy intensity reduction targets reminds us to reexamine the previous nexus. This study investigates how energy intensity targets affect renewable energy development at different economic levels by applying a partially linear functional coefficient model with panel data collected from 30 provinces in China during 2006–2019. The results suggest that renewable energy can be promoted by energy intensity reduction targets only when economic development levels lie between 18434 yuan (about 2673 dollars) and 87427 yuan (about 12677 dollars). The promoting effect has disappeared in most of China's developed eastern provinces, including Tianjin, Guangdong, Beijing, Fujian, Zhejiang, Shanghai, and Jiangsu. However, R&D intensity targets can serve as an alternative tool for energy intensity reduction targets in the abovementioned provinces, as they produce a significant effect on advancing renewable energy consumption, especially as such an effect gradually increases after economic development levels reach 37956 yuan (about 5504 dollars). These results indicate that policymakers should adopt target management policies and tools tailored to local conditions to develop renewable energy.

Potential policy coordination: Can energy intensity targets affect energy poverty?

China's central government began setting mandatory energy intensity targets for provincial governments in the first year of the Eleventh Five-Year Plan. In addition to ensuring China's sustainable reduction of energy intensity, energy intensity targets may also have the policy coordination effect of alleviating energy poverty. Based on panel data of 30 provinces in China from 2006 to 2020, this paper empirically studies the impact of energy intensity targets on energy poverty. Asymmetric analysis is also conducted in this paper, as well as an exploration of the potential mechanisms through which energy intensity targets affect energy poverty. The research conclusions are as follows: (1) Energy intensity targets have a significant policy coordination effect of alleviating energy poverty, even though that is not the intended policy purpose. (2) In regions with better energy infrastructure, industrial structure distortions can enlarge the impact of energy intensity targets on alleviating energy poverty. However, in disadvantaged areas, industrial structure distortions do not moderate the impact of energy intensity targets on energy poverty. (3) There is a heterogeneous relationship between energy intensity targets and energy poverty at different quantiles. The energy poverty alleviation effect of energy intensity targets is stronger in regions with more severe energy poverty. But in regions where energy poverty is not severe, energy intensity targets have no significant impact on energy poverty. (4) Energy poverty exhibits a clear spatial correlation. Energy intensity targets not only affect local energy poverty, but also affect energy poverty in adjacent areas, indicating that the impact of energy intensity targets on energy poverty has significant spatial correlation characteristics. We also make suggestions for policy coordination in the energy sector.

Spillover effect of energy intensity targets on renewable energy consumption in China: A spatial econometric approach

China is under enormous pressure to control its energy consumption and carbon emissions and is working to drive energy intensity reduction and renewable energy transition through energy intensity targets management. To examine the effectiveness of energy intensity targets on renewable energy, a two-regime spatial Durbin model and the spatial lag of the X model were employed to examine inter-provincial energy intensity targets’ strategic interaction and their impact on renewable energy consumption based on provincial panel data from 2006 to 2019. The results indicate that a “race to the top” strategic interaction exists among provincial governments when setting energy intensity targets. Energy intensity targets in local and neighboring provinces significantly promote renewable energy consumption, but further analysis indicates regional heterogeneity; that is, energy intensity targets in resource-rich and non-resource-rich areas exhibit positive and negative impacts, respectively, on renewable energy consumption. Additionally, energy intensity targets increase renewable energy consumption by optimizing energy outcomes and encouraging green innovation. These empirical results suggest several lines of conduct for decision-makers.

Energy target-based responsibility system and corporate energy efficiency: Evidence from the eleventh Five Year Plan in China

China initiated an energy target-based responsibility system for local bureaucrats in its eleventh Five Year Plan, influencing officials' promotion incentives. Leveraging manually collected provincial energy intensity targets (EIT) and a unique firm-level dataset, we investigate the effect of such a target-based responsibility system on corporate energy efficiency in China. We find that the EIT constraint has a negative effect on corporate energy efficiency. On average, a one-percentage-point increase in the EIT leads to the decline of corporate energy efficiency by 7.7%. The finding indicates that overall enhanced provincial energy efficiency was not driven by improved corporate energy efficiency but by economic restructuring in the eleventh Five Year Plan. We also show that the inhibition effect tends to be pronounced for state-owned firms, export-oriented firms, capital-intensive firms, and firms located in central regions. In the context of dual control of energy intensity reduction and amount reduction (the Dual Control Policy), this study provides timely policy implications by shedding light on the effects of such a target-based performance system on corporate energy efficiency.

The economic and environment impacts of energy intensity target constraint: Evidence from low carbon pilot cities in China

China has taken substantial policy and set some energy intensity (EI) targets to control CO2 emissions. But how the EI target will affect economy and environment is still unknown. The aim of this paper is to simulate the effect of different EI target constraints on regional economy and energy environment. The study is conducted in 13 Chinese low-carbon pilot cities by a multi-regional environmental dynamic computable general equilibrium model. The results show that: (1) The EI target has a small impact on developed cities, but a greater impact on developing cities, especially in the areas whose economy output is dominated by the secondary industry. (2) The EI target will change the emission path and advance the peak time of emissions. The stronger the EI target constraint is, the earlier the regional carbon emissions reach the peak. (3) The excessive implementation of EI target policy will have negative effect on regional economy. After introducing EI target constraint, the per capita GDP, total labor supply and per capita income will reduce. The finding confirmed the effectiveness of China's EI target policy in addressing climate change and provide guidance for local governments on setting appropriate energy intensity policies to further reduce CO2 emissions.

An Economy-wide Analysis of the Energy and Environmental Impacts of International Trade Policy Adjustments for Chemical Industry in China.

In China, the proportion of energy consumption and carbon emissions embodied in international trade in chemical industry is high. It is important to consider how international trade policy adjustments in chemical industry will affect the economy and environment so as to achieve the goal of carbon intensity. This study investigates the impact of international trade policy adjustments. We adopt a computable general equilibrium model to simulate the impacts of trade policy adjustment. The result shows all adjustment plans cause economic losses. All plans will promote energy structure toward cleaner. All plans reduce CO2 emissions and energy consumption but cannot realize the carbon intensity and energy intensity target. The adjustment of tariff policy in basic raw materials sector should be smaller than that of other sectors. Raising the export tariff is the best policy choice for achieving the carbon intensity target, but other low-carbon policies should be introduced. In particular, protection measures should be taken for the energy industry.

Success and failure of the voluntary action plan: Disaggregated sector decomposition analysis of energy-related CO2 emissions in Japan

To accomplish the goal of reducing greenhouse gas (GHG) emissions, the Japanese Business Federation (JBF) has implemented the voluntary action plan (VAP), which includes the unique feature of not penalizing industrial organizations for failing to meet the CO2 emissions or energy consumption reduction targets. This study evaluates the role of the VAP in emission reduction by analyzing highly disaggregated data of 197 sectors from 1980 to 2015 using the logarithmic mean Divisia index (LMDI) method. The results indicate that the increase in CO2 emissions among Japanese industries is mainly caused by the increase in indirect CO2 emissions. Moreover, the energy consumption structure has progressively shifted from fossil fuels to electricity. The decomposition analysis highlights two key points. (1) The VAP is ineffective in reducing emissions in sectors with low market concentration. (2) Energy intensity targets of the VAP does not lead to a significant reduction in CO2 emissions. Thus, this study concludes that the contribution of the VAP in reducing CO2 emissions is limited. Evidence from our research suggests four directions for future policy design and implications.

Do provincial energy policies and energy intensity targets help reduce CO2 emissions? Evidence from China

The effects of Chinese local governments' energy policies and top-down target management on CO2 emissions have received little attention to date. The current study uses 18 years of panel data from Chinese provinces to empirically investigate the impacts of provincial circular economy development policies, energy saving policies, comprehensive resource utilization policies, and energy intensity targets set by the central government on CO2 emissions. The results indicate that provincial circular economy development policies and energy intensity targets are conducive to reducing CO2 emissions, while provincial energy saving policies and comprehensive resource utilization policies have no significant impact. The findings confirm the effectiveness of China's target management tools in addressing climate change, and provide guidance for local governments on actively implementing local policies to promote local CO2 emission reduction.

Impacts of energy intensity target constraint on elasticity of substitution between production factors in China

China has implemented the energy intensity target (EIT) constraint policy to improve its energy efficiency for more than three decades. Producers in China need to consider factor prices, outputs, and EIT constraint while they plan the number of input factors. Therefore, this article brings the EIT into the conditional input demand function of an input factor and assesses the impacts of the elasticity of substitution between different production factors. By building two-factor substitution elasticity models with and without EIT constraints, this paper examines the impacts of EIT constraint on the elasticity of substitution between input factors in both the fossil fuel production sector and the non-fossil-fuel production sector. The main conclusions are, firstly, EIT constraint influences both own-price elasticity of an input factor and cross-price elasticity between different input factors. Secondly, EIT constraint hinders the responses of some input factors to the price changes of other input factors, and changes relationships between some input factors from complementary to substitute, or vice versa. Two policy implications are obtained. First, producers should consider the impacts of EIT constraint on their investment, labor input, energy input, and raw materials purchase and bring these impacts into their business strategies. Second, reducing energy input by changing prices of other production factors will be ineffective under EIT constraint.

Study on the industrial structure optimization under constraint of energy intensity

This study establishes a multi-sector dynamic computable general equilibrium framework that integrates energy intensity module to explore the reverse feedback effect of energy intensity control on industry structure. The results indicate that (1) the tightening effect of energy intensity constrains on the Industrial sector is most significant, followed by the Tertiary Industry, with the least impact on Agriculture; (2) when there is no technological progress in the departments, the change of industrial structure is mainly reflected in the sharp decline in the proportion of Industry and the significant increase in the proportion of Tertiary Industry. When technological progress exists in high energy-consumption departments, the tightening effect of energy intensity constraints on the industrial sector will be reduced; when there is technological progress in all departments, the industrial structure will have a smaller change, and the technology progress can alleviate the tightening effect of the energy intensity target on various sectors; (3) under the constraint of energy intensity, the high energy-consuming industry shifts to the Equipment Manufacturing with low energy-consumption and high-added value. The increasing proportion of Tertiary Industry mainly comes from two industries including Wholesale, Retail, Hoteling and Catering, and Transportation, Storage, and Post.

Effect of Perform-Achieve-Trade Policy on Energy Efficiency of Indian Industries

India adopted a Cap and Trade in energy intensity via a scheme called Perform-Achieve-Trade (PAT) with the objective to improve energy efficiency of the high energy intensive industries through target setting and tradable energy saving certificates. The scheme was announced in 2007 and the first cycle runs from April 2012-March 2015. This is the first market-based instrument adopted in India to achieve environmental protection. Under this scheme, the Bureau of Energy Efficiency identified eight most energy intensive industries, and within each of these industries it identified the most energy intensive plants and assigned them Energy Intensity (EI) targets. Firms exceeding their targets were given ESCerts which could be traded in Indian Energy Exchange and Power Exchange of India. This paper aims to examine effectiveness of the PAT scheme on inducing firms to reduce energy intensity of Cement, Fertilizer, and Pulp and Paper Industries. We use panel data for firms in the three industries with a difference-in-difference model to estimate the average treatment effect of the PAT scheme on firms that were assigned targets. We find that the PAT scheme was effective in improving energy intensity of firms in the cement and fertilizer industry, but not in the pulp & paper industry. Further, the scheme resulted in a decrease of power & fuel expenditure in the two industries, which in turn amounts to reduction of 9.53 million tC and 1.37 million tC for the cement and fertilizer industries respectively. The paper finally examines the market for ESCerts.

Meeting 2030 primary energy and economic growth goals: Mission impossible?

To meet climate change mitigation objectives, international institutions have adopted targets aimed at reducing or ending growth of primary energy consumption. Simultaneously, continued economic growth is forecasted to meet human development goals. Together, declining energy consumption and rising gross domestic product (GDP) is called “absolute decoupling.” However, absolute decoupling is unprecedented for the world economy as a whole (since at least 1971). Is absolute decoupling “Mission impossible?” Given the high stakes, we need a clearer understanding of the extent of future energy–GDP decoupling. To gain that understanding, we perform societal exergy analyses using a novel Physical Supply Use Table framework to assess historical and future trends of primary energy consumption and economic growth for one medium human development index country and one very high human development index country, Ghana and the United Kingdom (UK), respectively.Three key results are obtained. First, we find that it will be very difficult to absolutely decouple primary energy consumption from economic activity. This is particularly true for Ghana’s rapidly growing economy, where projected economic growth of 5.0 %/year will require growth of primary energy consumption of around 2.0 %/year. It is also true for the UK, where at best primary energy consumption appears constant into the future to provide a projected GDP growth of 2.7 %/year. Second, we find that energy efficiency is not an effective means to reduce primary energy consumption and associated carbon dioxide emissions due to economy-wide feedback effects, placing greater importance on decarbonizing the primary energy supply. Third, we find primary energy intensity is not an appropriate metric to measure energy reduction progress, because meeting primary energy intensity targets does not ensure absolute decoupling will occur. At present, absolute decoupling appears to be mission impossible.

Impact of China-Pakistan economic corridor on Pakistan's future energy consumption and energy saving potential: Evidence from sectoral time series analysis

China-Pakistan Economic Corridor is a strategic economic project to enhance economic connectivity between Pakistan and China. We estimate the impact of CPEC related economic activities on overall energy consumption and its saving potential for Pakistan by 2030. Johansen cointegration is employed to evaluate the long run relationship between energy consumption and its determinants at aggregate and sectoral levels and forecast future energy demand using scenario analysis. Baseline scenario results indicate that aggregate energy consumption will approximately be 41% higher in 2030 compared to 2013 levels. Energy consumption in industrial and commercial sectors in 2030 will increase by 136% and 414% under baseline scenario. The Monte Carlo Simulations incorporating future uncertainty support the scenario analysis results. Energy saving potential suggests that energy conservation should be part of overall energy policies and sector specific energy intensity targets should be implemented to harness the energy saving potential.

China’s energy intensity target allocation needs improvement! Lessons from the convergence analysis of energy intensity across Chinese Provinces

To explore the reasonability of the decomposition of China’s national energy intensity target, we tested the convergence of energy intensity across 30 Chinese provinces, including stochastic convergence, β-convergence, and ó-convergence. Based on panel data from 30 Chinese provinces across three Five-Year Plan periods, the results confirmed the existence of stochastic convergence and β-convergence, but did not prove the existence of ó-convergence in China’s energy intensity. In addition, by comparing the convergence speed over the three Five-Year Plan periods, the results showed that China’s energy intensity targets for the provinces slowed β-convergence in energy intensity during the 11th and 12th Five-Year Plan periods, highlighting the need to optimize the decomposition of China’s national energy intensity target. Finally, issues related to the decomposition of China’s national energy intensity target were discussed and policy suggestions were proposed to optimize it from the perspective of promoting the convergence of energy intensity across Chinese provinces.

Do energy intensity targets matter for wind energy development? Identifying their heterogeneous effects in Chinese provinces with different wind resources

Setting energy intensity targets is an important policy instrument that addresses the shortage of energy resources and the increase of carbon emissions in China, but no study has empirically investigated the effects of energy intensity targets on renewable energy development. Based on panel data of Chinese provinces from 2001 to 2014, in this study a novel difference-in-difference design is applied to identify the causal relationship between energy intensity targets and wind energy generation capacities. The results show that mandatory energy intensity targets can drive provinces to develop renewable wind energy. The incentive effects of energy intensity targets on wind energy development are also significantly stronger for provinces with higher levels of wind resources than provinces with lower levels. These results are robust to a test set that reveals a positive moderating effect of energy intensity targets on the relationship between wind resources and wind energy generation capacities, based on alternative energy intensity target measures. The findings confirm that China’s target responsibility system can play an important role in promoting renewable energy development.

An integrated approach for allocating carbon emission quotas in China’s emissions trading system

China has started its design of national emissions trading system (ETS), and power sector is included in its initial stage. In this paper, we propose a systematic framework to estimate total carbon emission quota required to meet the national GDP energy intensity target, and allocate the emission quota. The theoretical framework consists of three basic approaches - “top-down”, “bottom-up” and “the integration” approaches, and assumes key parameters such as CO2 emission intensity target, contribution of emission abatement from ETS, coverage range of ETS, and industry emissions standards. Based on actual data from 2011, we forecast development of China’s thermal power industry into 2020 under different official planning scenarios. With the approaches proposed, we show on to adjust the emissions benchmarking at technology level for reaching expected contribution of emissions abatement from ETS. The proposed methodology is informative to ETS market regulators and power utilities.

Assessment of the economic impacts of continuous energy intensity target constraint in China: Based on an analytical general equilibrium model

Abstract Based on the framework of analytical general equilibrium model, this study builds an energy intensity target (EIT) constraint model, and simulates the impacts of continuous EIT constraint policy on the fossil fuel production (FFP) sector, non-fossil-fuel production (NFFP) sector, household sector and price system in China. The main findings of this paper are, firstly, the EIT constraint can change the marginal products and the cross-price elasticities of input factors. Secondly, stricter EIT constraint can transfer capital and labor inputs from the FFP sector to the NFFP sector, and lead to a “contractionary effect” in the FFP sector – shown as declining inputs and output. The “contractionary effect” will decline gradually or even fade away if the EIT constraint is gradually reduced. Thirdly, if the total capital and labor inputs in the whole economy continue to grow at certain rates, along with the weakening of the EIT constraint, the reduction in energy input and the growth of capital and labor inputs in the NFFP sector will slow down, however, the growth rates of output and intermediate input will increase continuously. Fourthly, the EIT constraint has negative impacts on the NFFP sector, price system and household consumption, but these impacts are affordable to the whole economy. If the EIT constraint is loosened under a certain level, it may not curb the growth of fossil fuel consumption anymore. Therefore, other supporting policies for energy conservation must be in place.

Crude oil price volatility and energy mix in Saudi Arabia

ABSTRACTThe status of crude oil in the global energy mix shows that crude oil is the most sought after energy source worldwide. Saudi Arabia is an important crude oil exporting nation heavily dependent on its crude oil revenue—which dominates the energy mix in the country. The quest for energy production from fossil in Saudi Arabia by directly burning crude oil for electricity power generation have negative impact on industrial production in the Kingdom with significant cost implication and the adverse effect on the environment. Employing the Markov switching regression model, our simulation confirms the negative impact of crude oil price volatility for the industrial sector return in Saudi Arabia. An energy intensity target for the industrial sector and the diversification of energy source will help ensure the elimination of waste in the production and consumption of energy in the Kingdom—boosting energy efficiency in general with diminishing production cost.