The impacts of removing energy subsidies on economy-wide rebound effects in China: An input-output analysis

Facing with the increasing contradiction of economic growth, energy scarcity and environmental deterioration, energy conservation and emissions abatement have been ambitious targets for the Chinese government. Improving energy efficiency through technological advancement is a primary measure to achieve these targets. However, the existence of energy rebound effects may completely or partially offset energy savings associated with technological advancement. This paper adopted a modified input-output model to estimate the economy-wide energy rebound effects across China's economic sectors with the consideration of energy subsidies. The empirical results show that the aggregate rebound effect of China is about 1.9% in 2007–2010, thus technological advancement significantly restrains energy consumption increasing. Removing energy subsidies will cause the aggregate rebound effect declines to 1.53%. Specifically, removing subsidies for coal and nature gas can reduce the rebound effects signifcantly, while removing the subsidies for oil products has a small impact on rebound effect. The existence of rebound effects implies that technological advancement should be cooperated with energy price reform so as to achieve the energy saving target. In addition, the government should consider the diversity of economic sectors and energy types when design the reform schedule.     

Price and expenditure elasticities of residential energy demand during urbanization: An empirical analysis based on the household-level survey data in China

Urbanization, one of the most obvious characteristics of economic growth in China, has an apparent “lock-in effect” on residential energy consumption pattern. It is expected that residential sector would become a major force that drives China's energy consumption after urbanization process. We estimate price and expenditure elasticities of residential energy demand using data from China's Residential Energy Consumption Survey (CRECS) that covers households at different income levels and from different regional and social groups. Empirical results from the Almost Ideal Demand System model are in accordance with the basic expectations: the demands for electricity, natural gas and transport fuels are inelastic in the residential sector due to the unreasonable pricing mechanism. We further investigate the sensitivities of different income groups to prices of the three types of energy. Policy simulations indicate that rationalizing energy pricing mechanism is an important guarantee for energy sustainable development during urbanization. Finally, we put forward suggestions on energy pricing reform in the residential sector based on characteristics of China's undergoing urbanization process and the current energy consumption situations.     

Achieving low-carbon urban passenger transport in China: Insights from the heterogeneous rebound effect

The rapid increase in energy consumption and carbon emissions in China's passenger transportation sector threatens both the environment and the nation's energy security. Energy efficiency improvements, leading to lower fuel consumption, are therefore of considerable interest to policymakers trying to achieve low-carbon travel. However, it is well established that higher miles per gallon efficiencies can, by reducing the costs of travel, lead to some level of increased personal travel: the so-called ‘rebound effect’. This paper describes an empirical study to measure the size and also the variability in this effect at the provincial level and what this variability implies for a carbon tax policy. This rebound effect is quantified using a two-stage Almost Ideal Demand System (AIDS) model. A backfire effect (i.e. the rebound is ≫100%) is observed in urban passenger transport, with disparities in the size of the rebound effect ranging from 114% to 153% among China's provinces. The differences in economic development as well as related differences in consumers' behavior, especially in the behavior of “marginal consumers”, have contributed to this heterogeneity, with a larger carbon tax (more than 110Yuan/tonne) needed in richer provinces such as Jiangsu, Zhejiang, Guangdong and Fujian in order to bring about similar levels of carbon reductions nationwide.     

Analysis of China's energy utilization for 2007

China is the world's second-largest energy producer and consumer, so that it is very necessary to analyze China's energy situation for saving energy consumption and reducing GHG emission. Energy flow chart is taken as a useful tool for sorting out and displaying energy statistics data. Energy statistics data is the premise and foundation for analyzing energy situation. However, there exit many differences between China and foreign energy balance. Based on the international criterion of energy balance and some advices given by related experts, the author properly adjusts China's energy balance. And the purpose of this paper is to draft China's energy flow chart for 2007, which is used to study the characteristics of energy production and consumption in China. We find that: (1) coal is the main energy in China, which accounted for 73.2% of total energy supply in 2007; (2) thermal power accounted for 83.2% of the total electricity supply, and 78.43% thermal power was based on coal; (3) in 2007, the secondary industrial sector consumed about 69.93% of energy; (4) China's energy utilization efficiency was about 33.23% in 2007.     

Energy rebound effect in China's Industry: An aggregate and disaggregate analysis

Considering the crucial role of industrial sectors in energy conservation, this paper investigates the impact of output growth on energy consumption in China's industrial sectors with an index decomposition model and the energy rebound effect in the industrial sectors with a panel data model using the annual data during 1994–2012. The empirical results indicate that: first, industrial output growth is proved to be the major factor in promoting industrial energy consumption, while energy intensity reduction and structure shifts across industrial sub-sectors play the dominant roles in slowing down industrial energy consumption. Second, there does exist energy rebound effect in China's aggregate Industry, which ranges from 20% to 76% during 1995–2012 (or 39% on average). In particular, the energy rebound effect in Manufacturing is relatively smaller during the sample period (i.e., 28% on average). Finally, the energy rebound effect in both China's aggregate Industry and Manufacturing exhibit an overall decreasing trend over time.     

Multi-regional input–output model and ecological network analysis for regional embodied energy accounting in China

Chinese regions frequently exchange materials, but regional differences in economic development create unbalanced flows of these resources. In this study, we examined energy by assessing embodied energy consumption to describe the energy-flow structure in China's seven regions. Based on multi-regional monetary input–output tables and energy statistical yearbooks for Chinese provinces in 2002 and 2007, we accounted for both direct and indirect energy consumption, respectively, and the integral input and output of the provinces. Most integral inputs of energy flowed from north to south or from east to west, whereas integral output flows were mainly from northeast to southwest. This differed from the direct flows, which were predominantly from north to south and west to east. This demonstrates the importance of calculating both direct and indirect energy flows. Analysis of the distance and direction traveled by the energy consumption centers of gravity showed that the centers for embodied energy consumption and inputs moved southeast because of the movements of the centers of the Eastern region. However, the center for outputs moved northeast because the movement of the Central region. These analyses provide a basis for identifying how regional economic development policies influence the embodied energy consumption and its flows among regions.     

Measuring energy rebound effect in the Chinese economy: An economic accounting approach

Estimating the magnitude of China's economy-wide rebound effect has attracted much attention in recent years. Most existing studies measure the rebound effect through the additional energy consumption from technological progress. However, in general technological progress is not equivalent to energy efficiency improvement. Consequently, their estimation may be misleading. To overcome the limitation, this paper develops an alternative approach for estimating energy rebound effect. Based on the proposed approach, China's economy-wide energy rebound effect is revisited. The empirical result shows that during the period 1981–2011 the rebound effects in China are between 30% and 40%, with an average value of 34.3%.     

Spatial spillover effects in determining China's regional CO2 emissions growth: 2007–2010

This study proposes an alternative input–output based spatial structural decomposition analysis to elucidate the importance of domestic regional heterogeneity and inter-regional spillover effects in determining China's regional CO₂ emissions growth. Our empirical results, based on the 2007 and 2010 Chinese inter-regional input–output tables, show that changes in most regions' final demand scale, final expenditure structure, and export scale have positive spatial spillover effects on other regions' CO₂ emissions growth; changes in most regions' consumption and export preference help reduce other regions' CO₂ emissions; changes in production technology and investment preferences may exert positive or negative effects on other region's CO₂ emissions growth through domestic supply chains. For some regions, the aggregate spillover effect from other regions may be larger than the intra-regional effect in determining regional emissions growth. All these facts can significantly help provide a better, deeper understanding of the driving forces behind the growth of regional CO₂ emissions and can thus enrich the policy implications concerning a narrow definition of “carbon leakage” through domestic inter-regional “trade” as well as a relevant political consensus about responsibility sharing between developed and developing regions inside China.     

How the removal of energy subsidy affects general price in China: A study based on input–output model

In China, most energy prices are controlled by the government and are under-priced, which means energy subsidies existing. Reforming energy subsidies have important implications for sustainable development through their effects on energy price, energy use and CO₂ emission. This paper applies a price-gap approach to estimate China's fossil-fuel related subsidies with the consideration of the external cost. Results indicate that the magnitude of subsidies amounted to CNY 1214.24 billion in 2008, equivalent to 4.04% of GDP of that year. Subsidies for oil products are the largest, followed by subsidies for the coal and electricity. Furthermore, an input–output model is used to analyze the impacts of energy subsidies reform on different industries and general price indexes. The findings show that removal of energy subsidies will have significant impact on energy-intensive industry, and consequently push up the general price level, yet with a small variation. Removing oil products subsidies will have the largest impact, followed by electricity, coal and natural gas. However, no matter which energy price increases, PPI is always the most affected, then GDP deflator, with CPI being the least. Corresponding compensation measures should be accordingly designed to offset the negative impact caused by energy subsidies reform.     

A review on China's Energy Storage Industry under the “Internet Plus” initiative

In the context of China's “Internet Plus” era, the application of big data and energy storage technology etc. plays an important role in controlling the renewables of randomness and intermittence during the generation. This paper focuses on the development of China's Energy Storage Industry, summarizes the industrial situation and policy environment, analyses China's Energy Storage Industry by the PEST‐SWOT framework, and discusses the development trends and three cases under the “Internet Plus” initiative. At last, several recommendations are offered from energy storage system, development solutions, market design and international cooperation, aiming to cope with the issues concerning the development of China's Energy Storage Industry and future challenges. It is expected that such recommendations can be a boost to China's energy storage industry in the future.     

The oil-slick trade: An analysis of embodied crude oil in China's trade and consumption

China has become the world's second largest crude oil importer and consumer. The international fragmentation of production has had an important impact on China's oil consumption, which cannot be assessed adequately through only checking China's trade data of crude oil. Based on a global multi-regional input–output model, we examine crude oil embodied in China's trade during 1995–2011. The results show that approximately one fifth to one third of imported oil in China is re-exported through producing commodities and services for satisfying final consumption outside China. We show that China is playing a role as a transit hub of crude oil from extraction locations to global consumers, particularly those in advanced countries. Foreign consumers actually benefit from China's global seeking of natural resources, a fact that is usually overlooked by critics of China's oil thirst. In addition, we show that China's oil import dependence assessed from the consumption side is greater than when assessed from the production side, shedding new light on the discussion of energy security in China.     

改进中国能源平衡表的建议

中国能源平衡表尚不完善,国际能源组织已有成熟方法与约定,建议与国际接轨,并主要从“四破三扩二改一增加”进行改进。“四破”:破“工厂法”,企业填报能源终端消费数据时,要按能源平衡表部门细分进行填表。破“原煤法”,煤炭平衡数据改用经洗选除掉杂质后的商品煤。破“标准煤法”,改tce为toc表示。破“火电煤耗法”,电力的二次能源和一次能源投入,按物理含能量计算其当量;“三扩”:扩细“其他石油制品”、“其他焦化产品”、“其他煤气”、“其他能源”四个产品。扩分“交通运输”、“用作原材料”两个项目。扩大和完善“分析指标”;“两改”:电的一次能源形式改用投入产出法。能源生产和转换部门的生产过程消费不计入终端能源消费;“一增加”即增加“非常规能源”指标。     

Carbon emissions in China: How far can new efforts bend the curve?

While China is on track to meet its global climate commitments through 2020, China's post-2020 CO₂ emissions trajectory is highly uncertain, with projections varying widely across studies. Over the past year, the Chinese government has announced new policy directives to deepen economic reform, to protect the environment, and to limit fossil energy use in China. To evaluate how new policy directives could affect energy and climate change outcomes, we simulate two levels of policy effort—a continued effort scenario that extends current policies beyond 2020 and an accelerated effort scenario that reflects newly announced policies—on the evolution of China's energy and economic system over the next several decades. We perform simulations using the China-in-Global Energy Model, C-GEM, a bespoke recursive-dynamic computable general equilibrium model with global coverage and detailed calibration of China's economy and future trends. Importantly, we find that both levels of policy effort would bend down the CO₂ emissions trajectory before 2050 without undermining economic development. Specifically, in the accelerated effort scenario, we find that coal use peaks around 2020, and CO₂ emissions level off around 2030 at 10 bmt, without undermining continued economic growth consistent with China reaching the status of a “well-off society” by 2050.     

Rebound effect of improved energy efficiency for different energy types: A general equilibrium analysis for China

This paper explores the rebound effect of different energy types in China based on a static computable general equilibrium model. A one-off 5% energy efficiency improvement is imposed on five different types of energy, respectively, in all the 135 production sectors in China. The rebound effect is measured both on the production level and on the economy-wide level for each type of energy. The results show that improving energy efficiency of using electricity has the largest positive impact on GDP among the five energy types. Inter-fuel substitutability does not affect the macroeconomic results significantly, but long-run impact is usually greater than the short-run impact. For the exports-oriented sectors, those that are capital-intensive get big negative shock in the short run while those that are labour-intensive get hurt in the long run. There is no “backfire” effect; however, improving efficiency of using electricity can cause negative rebound, which implies that improving the energy efficiency of using electricity might be a good policy choice under China's current energy structure. In general, macro-level rebound is larger than production-level rebound. Primary energy goods show larger rebound effect than secondary energy goods. In addition, the paper points out that the policy makers in China should look at the rebound effect in the long term rather than in the short term. The energy efficiency policy would be a good and effective policy choice for energy conservation in China when it still has small inter-fuel substitution.     

Changes in energy requirements of the residential sector in India between 1993–94 and 2006–07

A substantial amount of primary and secondary energy is consumed by the residential sector. Residential energy consumption includes energy required for construction activity and household consumption. Hence there is a need to quantify energy consumption, its significance and causes. Calculating energy intensity of goods and services is the first step towards quantifying the causes. This research is based on the 115 sector classification input–output tables for India, for 1993–94, 1998–99 and 130 sector classification input–output tables for 2003–04 and 2006–07. Energy intensity of sectors related to household consumption has been calculated to analyze the trend between 1993–94 and 2006–07. Indirect energy requirements of Indian households have been assessed in this study from calculations of total primary energy intensity along with private final consumption expenditure. Results indicate that energy consumption has increased for all categories except “medical care and hygiene”. Percentage increase in indirect primary energy consumed by households is maximum for “house building” and “recreation” categories. Finally a complete decomposition analysis of indirect primary energy consumed by households has been carried out based on changing structural composition of the private final consumption expenditure, energy intensity patterns, per capita expenditures on energy and population.     

Past as Prologue? Understanding energy use in post-2002 China

From 2002 to 2009, China's energy use nearly doubled, making it the world's largest emitter of carbon dioxide more than a decade ahead of forecasts. Why did energy use in China rise so rapidly after 2002? Using index decomposition analysis, we find that the vast majority of growth in energy consumption in China over the 2000s was due to GDP growth, with a small but important amount due to structural change as a result of China's emergence as a net metals exporter. Changing prices and data anomalies make energy intensity and structural change appear to be more important drivers of energy consumption than they actually were; the infamous reversal in energy intensity in China from 2002 to 2004 may simply be an artifact of difficulties in accurately deflating value added. About half of the growth in energy consumption in China from 2002 to 2007 was driven by heavy industry. Using structural decomposition analysis, we find that growth in heavy industrial output was due primarily to growth in construction and equipment investment, with a small amount due to an increase in net metal exports. In tandem, these two findings suggest that the primary driver of energy consumption in China after 2002 was an acceleration of the country's investment-dominated model of GDP growth. Without rebalancing the economy toward consumption, there are limits to what improvements in energy conversion efficiency and end use energy efficiency can achieve in moderating growth in China's energy use.     

Effective ways to reduce CO2 emissions from China's heavy industry? Evidence from semiparametric regression models

Using China's province-level panel data from 2005 to 2017, this article uses a semiparametric regression model to investigate CO₂ emissions in China's heavy industry. Empirical results show that while economic growth exerted carbon reduction effects in the eastern region, it stimulated the growth of CO₂ emissions in the central and western regions. This is mainly due to regional differences in industrial structure and the high-tech industry. Energy efficiency has made a greater contribution to reducing CO₂ emissions in the central region because the R&D investment and patent rights granted in this region has grown faster. The energy consumption structure has a more complex impact. It exerts a “pulling first, then restricting” (Ո-shaped) nonlinear effect on CO₂ emissions in the eastern and western regions, but an inverted “N-shaped” effect in the central region. This is mainly due to the differences in the composition of energy consumption across regions. Environmental regulations have a positive “U-shaped” nonlinear impact on CO₂ emissions in the eastern and western regions. It means that environmental regulations help cut down CO₂ emissions in the early stage, and the facilitation effect gradually disappears at the later stage. Conversely, environmental regulations produce an inverted “U-shaped” impact in the central region.     

China's energy and emissions outlook to 2050: Perspectives from bottom-up energy end-use model

Although China became the world's largest CO₂ emitter in 2007, the country has also taken serious actions to reduce its energy and carbon intensity. This study uses the bottom-up LBNL China End-Use Energy Model to assess the role of energy efficiency policies in transitioning China to a lower emission trajectory and meeting its 2020 intensity reduction goals. Two scenarios – Continued Improvement and Accelerated Improvement – were developed to assess the impact of actions already taken by the Chinese government as well as planned and potential actions, and to evaluate the potential for China to reduce energy demand and emissions. This scenario analysis presents an important modeling approach based in the diffusion of end-use technologies and physical drivers of energy demand and thereby help illuminate China's complex and dynamic drivers of energy consumption and implications of energy efficiency policies. The findings suggest that China's CO₂ emissions will not likely continue growing throughout this century because of saturation effects in appliances, residential and commercial floor area, roadways, fertilizer use; and population peak around 2030 with slowing urban population growth. The scenarios also underscore the significant role that policy-driven efficiency improvements will play in meeting 2020 carbon mitigation goals along with a decarbonized power supply.     

Constructing a network of the social-economic consumption system of China using extended exergy analysis

The prominent conflict between consumption and environmental resources is acknowledged as a significant force in affecting the social-ecological community balance. The whole process of resource allocation, utilization, efficiency and outcome are crucial clues in uncovering the structural and functional characteristics in complex consuming systems. Herein, network relationship provides a system-oriented modeling technique for examining the structure as well as flow of materials or energy from an input–output perspective. Meanwhile, extended exergy, the only currently available thermodynamic based metric for social-economic environmental impacts associated with energy consumption, manpower and monetary operation as well as environmental emission, is an extension of the labor theory of value and a possible sustainability metric. The core purpose of this research is to construct a network of the social-economic consumption system of China using extended exergy analysis to explain the interrelationship among different sectors within a thermodynamic metric. Therefore, we firstly make a database of extended exergy accounting in the Chinese consumption system. Data are available for 2007, which can be divided into seven sectors based on the reclassification of the regularly published 42-sector Input–Output Table, namely, (1) Agriculture, (2) Extraction, (3) Conversion, (4) Industry, (5) Transportation, (6) Tertiary, and (7) Domestic sectors. Then we will construct an extended exergy network to gain insight into the thermodynamic distribution within sectoral criterion. Lastly, the network results and indicator analysis are explained for China's social metabolism maintained by a large quantity of energy, resources, and labor, as well as the environmental costs, within an exergy foundation.     

A hybrid modelling approach to develop scenarios for China's carbon dioxide emissions to 2050

This paper describes a hybrid modelling approach to assess the future development of China's energy system, for both a “hypothetical counterfactual baseline” (HCB) scenario and low carbon (“abatement”) scenarios. The approach combines a technology-rich integrated assessment model (MESSAGE) of China's energy system with a set of sector-specific, bottom-up, energy demand models for the transport, buildings and industrial sectors developed by the Grantham Institute for Climate Change at Imperial College London. By exploring technology-specific solutions in all major sectors of the Chinese economy, we find that a combination of measures, underpinned by low-carbon power options based on a mix of renewables, nuclear and carbon capture and storage, would fundamentally transform the Chinese energy system, when combined with increasing electrification of demand-side sectors. Energy efficiency options in these demand sectors are also important.