Energy prices and energy intensity in China : a structural decomposition analysis and econometric study

Since the start of its economic reforms in 1978, China's energy prices relative to other prices have increased. At the same time, its energy intensity, i.e., physical energy consumption per unit of Gross Domestic Product (GDP), has declined dramatically, by about 70%, in spite of increases in energy consumption. Is this just a coincidence? Or does a systematic relationship exist between energy prices and energy intensity? In this study, I examine whether and how China's energy price changes affect its energy intensity trend during 1980-2002 at a macro level. I conduct the research using two complementary economic models (the input-output-based structural decomposition analysis and econometric regression models) and a decomposition method of own-price elasticity of energy intensity. Findings include a negative own-price elasticity of energy intensity, a price-inducement effect on energy-efficiency improvement, and a greater sensitivity, in terms of the reaction of energy intensity towards changes in energy prices, of the industry sector, compared to the overall economy. Analysts can use these results as a starting point for China's energy use and carbon emission forecasts, which they traditionally conduct in China without accounting for energy intensity and energy prices.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Urban Studies and Planning.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Shi, Xiaoyu, M.C.P. Massachusetts Institute of Technology

Advisor dc:contributor.advisor

• Karen R. Polenske.

• Urban Studies and Planning.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/34173

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/34173