China's Changing Energy Intensity Trend: A Decomposition Analysis

17 Pages Posted: 29 Oct 2008

See all articles by Chunbo Ma

Chunbo Ma

The University of Western Australia - School of Agricultural and Environment

David I. Stern

Australian National University (ANU) - Crawford School of Public Policy

Date Written: October, 27 2008

Abstract

China experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000, but since then the rate of decline slowed and energy intensity actually increased in 2003. Most previous studies found that most of the decline was due to technological change, but disagreed on the role of structural change. To the best of our knowledge, no decomposition study has investigated the role of inter-fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000. In this paper, we use logarithmic mean Divisia index (LMDI) techniques to decompose changes in energy intensity in the period 1980-2003. We find that: (1) technological change is confirmed as the dominant contributor to the decline in energy intensity; (2) structural change at the industry and sector (sub-industry) level actually increased energy intensity over the period of 1980-2003, although the structural change at the industry level was very different in the 1980s and in the post-1990 period; (3) structural change involving shifts of production between sub-sectors, however, decreased overall energy intensity; (4) the increase in energy intensity since 2000 is explained by negative technological progress; (5) inter-fuel substitution is found to contribute little to the changes in energy intensity.

Keywords: China, Energy, Decomposition analysis, Inter-fuel substitution

JEL Classification: Q43

Suggested Citation

Ma, Chunbo and Stern, David I., China's Changing Energy Intensity Trend: A Decomposition Analysis (October, 27 2008). Energy Economics, Vol. 30, No. 3, 2008, Available at SSRN: https://ssrn.com/abstract=1290740

Chunbo Ma (Contact Author)

The University of Western Australia - School of Agricultural and Environment ( email )

Nedlands, Western Australia 6907
Australia

HOME PAGE: http://www.are.uwa.edu.au/

David I. Stern

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

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