Analysis and decomposition of energy consumption in the Chilean industry

With rising energy costs and climate change concerns, energy efficiency will be important in maintaining competitiveness and reducing the environmental impact of industrial activities. In this paper we study the Chilean industrial sector, which is the largest consumer of energy within the country. Energy demand and CO₂ emissions in Chile have grown rapidly in recent years while energy supply is mostly imported and subject to disruption. Therefore, it is important to understand energy consumption in this sector and determine which sub-sectors have the greatest potential to reduce energy consumption. We used the Index Decomposition Analysis (IDA), applying the Logarithmic Mean Divisia Index method I (LMDI-I), to quantify the impact of diverse driving factors on energy consumption. Furthermore, a panel data analysis was used to determine whether there are differences in energy intensity across firms with different characteristics. Our results show that energy intensity has risen over time although energy consumption remains stable. This fact supports the idea that energy efficiency policies could play an important role for the industrial sector. Additionally, energy consumption and energy intensity follow different patterns in each sub-sector; therefore we conclude that the application of differentiated sectoral policies is preferable over a single global policy.     

Changes in carbon intensity in China's industrial sector: Decomposition and attribution analysis

The industrial sector accounts for 70% of the total energy-related CO₂ emissions in China. To gain a better understanding of the changes in carbon intensity in China's industrial sector, this study first utilized logarithmic mean Divisia index (LMDI) decomposition analysis to disentangle the carbon intensity into three influencing factors, including the emission coefficient effect, the energy intensity effect, and the structure effect. Then, the analysis was furthered to explore the contributions of individual industrial sub-sectors to each factor by using an extension of the decomposition method proposed in Choi and Ang (2012). The results indicate that from 1996 to 2012, the energy intensity effect was the dominant factor in reducing carbon intensity, of which chemicals, iron and steel, metal and machinery, and cement and ceramics were the most representative sub-sectors. The structure effect did not show a strong impact on carbon intensity. The emission coefficient effect gradually increased the carbon intensity, mainly due to the expansion of electricity consumption, particularly in the metal and machinery and chemicals sub-sectors. The findings suggest that differentiated policies and measures should be considered for various industrial sub-sectors to maximize the energy efficiency potential. Moreover, readjusting the industrial structure and promoting clean and renewable energy is also urgently required to further reduce carbon intensity in China's industrial sector.     

What induced China's energy intensity to fluctuate: 1997–2006?

China is the second largest energy consumer in the world. During 1997–2002, China's energy intensity declined by 33%. However, it rose by 10.7% over 2003–2005, and declined by 1.2% in 2006. What induced China's energy intensity to fluctuate so drastically? Industry accounts for approximately 70% of the total energy consumption in China. In this paper, we decompose China's industrial energy intensity changes between 1997 and 2002 into sectoral structural effects and efficiency effects (measured by sectoral energy intensities at two-digit level and including the shifts of product mix in the sub-sector or firm level), using Törnqvist and Sato–Vartia Index methods. The results show that in this period, efficiency effects possibly contributed to a majority of the decline, while the contribution from structural effects was less. During 2003–2005, the excessive expansion of high-energy consuming sub-sectors and the high investment ratio were foremost sources of the increasing energy intensity. Attributed to the government efforts, the energy intensity has started to decline slightly since July 2006. In future, to save more energy, in addition to technical progress, China should attach more importance to optimizing its sectoral structure, and lowering its investment ratio.     

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.     

Global overview of industrial energy intensity

Given the need to reduce the CO₂ emissions coming from the manufacturing sector, it is important, for planning purposes, to know which countries and which manufacturing sub-sectors have the greatest potential for reducing energy use. Using data from the International Atomic Energy Agency and the United Nations Industrial Development Organization, the authors estimate trends in global decoupling of energy use and manufacturing value added, compare energy-use intensity in six country groups and estimate the potential for reducing energy use and CO₂ emissions under two scenarios and compare selected sub-sector energy intensity and estimate the potential for reducing energy use CO₂ emissions. The comparison of energy intensities across country groups and among countries suggests that there still remains significant potential to reduce energy use and associated CO₂ emissions. The analysis of four sub-sectors in developing and transition economies also shows similar but varied potential for reducing energy use and associated CO₂ emissions.     

China on the move: Oil price explosion?

Rapid expansion of highway and jet traffic in China has created a surge of demand for oil products, putting pressure on world energy markets and petroleum product prices. This paper examines trends in freight and passenger traffic to assess how growth in China's transport demand relates to growth in China's economy, as well as the energy intensity of transport. Based on assumptions about demand elasticity and energy intensity, a range of scenarios is developed for China's oil demand through 2020. Incremental oil demand from China's transport sector is then compared with world oil demand projections to assess the likely impact on world oil prices. The finding is that new demand from China's transport sector would likely raise world oil prices in 2020 by 1–3% in reference scenarios or by 3–10% if oil supply investment is constrained.     

China's energy efficiency target 2010

The Chinese government has set an ambitious target: reducing China's energy intensity by 20%, or 4.36% each year between 2006 and 2010 on the 2005 level. Real data showed that China missed its target in 2006, having reduced its energy intensity only by 1.3%. The objective of this study is to evaluate the feasibility and potential of the Chinese to achieve the target. This paper presents issues of macro-economy, population migration, energy savings, and energy efficiency policy measures to achieve the target. A top-down approach was used to analyse the relationship between the Chinese economic development and energy demand cycles and to identify the potentials of energy savings in sub-sectors of the Chinese economy. A number of factors that contribute to China's energy intensity are identified in a number of energy-intensive sectors. This paper concludes that China needs to develop its economy at its potential GDP growth rate; strengthen energy efficiency auditing, monitoring and verification; change its national economy from a heavy-industry-dominated mode to a light industry or a commerce-dominated mode; phase out inefficient equipment in industrial sectors; develop mass and fast railway transportation; and promote energy-efficient technologies at the end use. This paper transfers key messages to policy makers for designing their policy to achieve China's energy efficiency target.     

Methane emissions by Chinese economy: Inventory and embodiment analysis

Concrete inventories for methane emissions and associated embodied emissions in production, consumption, and international trade are presented in this paper for the mainland Chinese economy in 2007 with most recent availability of relevant environmental resources statistics and the input–output table. The total CH₄ emission by Chinese economy 2007 estimated as 39,592.70 Gg is equivalent to three quarters of China's CO₂ emission from fuel combustion by the global thermodynamic potentials, and even by the commonly referred lower IPCC global warming potentials is equivalent to one sixth of China's CO₂ emission from fuel combustion and greater than the CO₂ emissions from fuel combustion of many economically developed countries such as UK, Canada, and Germany. Agricultural activities and coal mining are the dominant direct emission sources, and the sector of Construction holds the top embodied emissions in both production and consumption. The emission embodied in gross capital formation is more than those in other components of final demand characterized by extensive investment and limited consumption. China is a net exporter of embodied CH₄ emissions with the emission embodied in exports of 14,021.80 Gg, in magnitude up to 35.42% of the total direct emission. China's exports of textile products, industrial raw materials, and primary machinery and equipment products have a significant impact on its net embodied emissions of international trade balance. Corresponding policy measures such as agricultural carbon-reduction strategies, coalbed methane recovery, export-oriented and low value added industry adjustment, and low carbon energy polices to methane emission mitigation are addressed.     

Does carbon intensity constraint policy improve industrial green production performance in China? A quasi-DID analysis

Whether or not carbon regulation policies can achieve the “double dividend” of carbon reduction and economic growth is vital for realizing the sustainable development of a certain country. This paper investigates the effects of a carbon intensity constraint policy (CICP) that the Chinese government put forward in 2009 on the green production performance (GPP, i.e., the environmentally sensitive productivity growth considering carbon emissions to be an undesirable output) of industrial sector (the largest carbon emitter in China) for the first time. Based on a non-radial and non-oriented DEA (data envelopment analysis) measure method, we first adopt the Luenberger indicator to estimate the GPP of China's 36 industrial sub-sectors over 2001–2013. Furthermore, regarding the CICP proposed in 2009 as a natural experiment, we assess the effects of such a policy on China's industrial GPP by using the quasi-difference-in-differences (quasi-DID) method. The results show that China's industrial GPP presents a circuitous downward trend after experiencing a transient rise. The heterogeneity of the GPP among industrial sub-sectors exists, and the increase in industrial output is the crucial driver of improving the GPP. China's industrial GPP has deteriorated after implementing the CICP, and the negative effect of such a policy is larger and larger over time. Such empirical results indicate that although the carbon regulation policy in China has achieved a surface success, the policy causes a factor substitution effect to hinder the improvement of the GPP. Therefore, China's current CICP is not effective in realizing the “double dividend” of carbon reduction and industrial growth.     

Energy savings potential in China's industrial sector: From the perspectives of factor price distortion and allocative inefficiency

China's industrial energy consumption accounted for 70.82% of national and 14.12% of world energy usage in 2011. In the context of energy scarcity and environmental pollution, the industrial sector in China faces unsustainable growth problems. By adopting the stochastic frontier analysis (SFA) framework, this paper analyzes the factor allocative efficiency of China's industrial sector, and estimates the energy savings potential from the perspective of allocative inefficiency. This paper focuses on three issues. The first is examining the factor allocative inefficiency of China's industrial sector. The second is measuring factor price distortion by the shadow price model. The third is estimating the energy savings potential in China's industrial sector during 2001–2009. Major conclusions are thus drawn. First, factor prices of capital, labor and energy are distorted in China due to government regulations. Moreover, energy price is relatively low compared to capital price, while is relatively high compared to labor price. Second, the industry-wide energy savings potential resulted from energy allocative inefficiency was about 9.71% during 2001–2009. The downward trend of energy savings potential implies the increasing energy allocative efficiency in China's industrial sector. Third, a transparent and reasonable pricing mechanism is conducive to improving energy allocative efficiency.     

Effects of diversified openness channels on the total-factor energy efficiency in China's manufacturing sub-sectors: Evidence from trade and FDI spillovers

Unparalleled, wide-spread, innovative, even intrusive are all words regularly used to describe the tremendous growth that has seen China has a well-established manufacturing system. It happened so quickly that it is often easy to lose sight of the factors that led to this success and, moreover, the costs that may have been paid by the environment. The burgeoning “Made in China 2025” strategy is firmly based on the premise of modernizing manufacturing and becoming a mode for environmentally-friendly practice. But these are goals that cannot reasonably be separated from the need to improve total factor energy efficiency (TFEE) across the manufacturing. Therefore, we investigated the impact of foreign direct investment (FDI) and trade on the TFEE of China's manufacturing at the sub-sector level. Specifically, we assessed capital stocks with a heterogeneous non-fixed depreciation method and used multi stochastic frontier analysis (SFA) models with linear-form inefficient variables to measure credited TFEE in 26 sectors of manufacturing from 2000 to 2016. To deepen our analysis, we also conducted an overall and period-by-period analysis with a modified STRIPAT model and feasible generalized least squares (FGLS) estimation. Our analysis shows an average TFEE of 0.7471 for China's manufacturing, but with several significant differences between the 26 sectors. Trade and FDI spillovers showed an overall increase across the period, with the highest export elasticity at 0.0607%. High-tech industries were generally quite efficient, while the elasticity coefficient of 0.0276% shows that increasing imports is an effective method of improving TFEE for energy-intensive sub-sectors. The regression analysis by periods reveals that the positive effect of imports gradually improved over time but, of the three FDI spillover effects modeled, only backward spillovers had a positive impact.     

Comprehensive evaluation of industrial CO2 emission (1989–2004) in Taiwan by input–output structural decomposition

Taiwan currently emits approximately 1% of the world's CO₂—ranking it 22nd among nations. Herein, we use the input–output (I–O) structural decomposition method to examine the changes in CO₂ emission over a 15-year period. By decomposing the CO₂ emission changes into nine factors for the periods of 1989–1994, 1994–1999, and 1999–2004, we have identified the key factors causing the emission changes, as well as the most important trends regarding the industrial development process in Taiwan. The 5-year increment with the largest increase of CO₂ emission was that of 1999–2004, due to the rapid increase of electricity consumption. From the decomposition, the industrial energy coefficient and the CO₂ emission factors were identified as the most important parameters for the determination of the highway, petrochemical materials, iron and steel, the commercial sector, and electric machinery as the major sources of increased CO₂ emission during the past 15 years. From 1989 to 2004, the level of exports and the level of domestic final demand were the largest contributors to the increase in the total increment of CO₂ change. During 1989–2004, the industrial energy coefficient and CO₂ emission factors, being minimally significant during 1989–1994, became extremely important, joining the domestic final demand and the level of exports factors as the major causes of the increase increment of CO₂. This indicates a heavy reliance upon high-energy (and CO₂) intensity for Taiwanese industries; therefore, continuous efforts to improve energy intensity and fuel mix toward lower carbon are important for CO₂ reduction, especially for the electricity and power generation sectors. Relevant strategies for reducing carbon dioxide emissions from major industries are also highlighted.     

Implications of a US electricity standard for final energy demand

This paper analyzes the emissions impact of an emissions intensity standard (metric tons of CO₂ per MWh of electricity) for the US power sector on US final energy demand — i.e. the manufacturing, residential, commercial, and transportation sectors. An emissions intensity standard, although geared towards the power sector, will have implications for these other sectors of the economy through its effect on economy-wide energy prices. Using a hybrid energy-economy simulation model (CIMS), we find the effect on aggregate emissions from final demand to mostly be small. However, after disaggregating final demand, we find significant changes in CO₂e emissions for several of sub-sectors. Given that emissions reductions in final energy demand are needed alongside power sector reductions for the US to achieve deep emissions cuts, our findings provide needed insight as to whether these eventual reductions will be helped or hindered by a US electricity standard.     

Estimation,characteristics, and determinants of energy-related industrial CO2 emissions in Shanghai (China), 1994–2009

This paper estimates energy-related industrial CO₂ emissions (ICE) in Shanghai from 1994 to 2009 and summarizes ICE's characteristics. The results show that the coal-type consumption is the ICE's largest source of the entire industry and that the energy consumption structure of CO₂ emissions of the entire industry depends largely on that of six sub-sectors of high emission group, which contributes to most of ICE. Furthermore, the paper implements an econometric study on the ICE's determinants based on the ICE-STIRPAT model. The results indicate that the relationship between ICE and per capita output presents an inverted N-shaped curve with two turning points, resulting from the comprehensive influence of scale, composition, and technique effects, and that most sub-sectors remain in the second stage of the curve. Energy efficiency exerts a more efficient control over ICE than R&D intensity. ICE intensity is regulated more easily than ICE scale. In the long run, industrial growth and coal-type consumption play the most important roles in driving ICE, whereas energy efficiency exerts the most prominent effect on reducing it. The results of the robustness analysis indicate that the utilization of the ICE-STIRPAT model is valid and robust under the setting of environment impact control over ICE in Shanghai.     

Analysis on the carbon trading approach in promoting sustainable buildings in China

With the high growth urbanization and increasing new urban population, the huge demand for infrastructures and dwellings has become a great challenge for the sustainable development in Chinese cities. The building sector shares one fourth of total energy consumption in the country and plays an important role in reducing the energy consumption and the consequential green house gas (GHG) emissions. Some policies have been issued for promoting the low carbon sustainable development in China's buildings. However, existing barriers especially the investment barriers substantially prevent the low carbon technologies and service from being employed effectively. The carbon trading scheme of cap-and-trade is now widely accepted as one cost-effective way to deal with the climate change issue in the world, and it can be utilized for overcoming the barriers to carbon reduction activities in China's building sector. A new Clean Development Mechanism (CDM) energy performance based method is designed for reducing transaction costs in implementing CDM projects in China's buildings before 2020. And then a “step by step” approach is formed to establish the domestic and international carbon trading mechanism to effectively reduce GHG missions in China's building sector after 2020.     

Can expanding natural gas infrastructure mitigate CO2 emissions? Analysis of heterogeneous and mediation effects for China

To verify whether the expansion of natural gas infrastructure can effectively mitigate carbon dioxide (CO₂) emissions in China, this study first investigates the impact of natural gas infrastructure on China's CO₂ emissions by employing a balanced panel dataset for 30 Chinese provinces covering 2004–2017. Fully considering the potential heterogeneity and asymmetry, the two-step panel quantile regression approach is utilized. Also, to test the mediation impact mechanism between natural gas infrastructure and CO₂ emissions, this study then analyzes the three major mediation effects of natural gas infrastructure on China's CO₂ emissions (i.e., scale effect, technique effect, and structure effect). The empirical results indicate that expansion of the natural gas infrastructure can effectively mitigate China's CO₂ emissions; however, this impact is significantly heterogeneous and asymmetric across quantiles. Furthermore, through analyzing the mediation impact mechanism, the natural gas infrastructure can indirectly affect CO₂ emissions in China through the scale effect (i.e., gas population and economic effects) and structure effect (i.e., energy structure effect). Conversely, the technique effect (i.e., energy intensity effect) brought by natural gas infrastructure on CO₂ emissions in China has not been significant so far. Finally, policy implications are highlighted for the Chinese government with respect to reducing CO₂ emissions and promoting growth in the natural gas infrastructure.     

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.     

Evaluating carbon dioxide emissions in international trade of China

China is the world's largest emitter of carbon dioxide (CO₂). As exports account for about one-third of China's GDP, the CO₂ emissions are related to not only China's own consumption but also external demand. Using the input–output analysis (IOA), we analyze the embodied CO₂ emissions of China's import and export. Our results show that about 3357 million tons CO₂ emissions were embodied in the exports and the emissions avoided by imports (EAI) were 2333 million tons in 2005. The average contribution to embodied emission factors by electricity generation was over 35%. And that by cement production was about 20%. It implies that the production-based emissions of China are more than the consumption-based emissions, which is evidence that carbon leakage occurs under the current climate policies and international trade rules. In addition to the call for a new global framework to allocate emission responsibilities, China should make great efforts to improve its energy efficiency, carry out electricity pricing reforms and increase renewable energy. In particular, to use advanced technology in cement production will be helpful to China's CO₂ abatement.     

The carbon content of Japan–US trade

We analyze the greenhouse gas emissions embodied in trade between Japan and the US, extending the Japanese government's linked Japan–US input–output model to include carbon emission coefficients for each sector. We estimate that in 1995, Japan–US trade reduced US industrial emissions by 14.6 million tons of CO₂-equivalent, and increased emissions in Japan by 6.7 million tons, for a global savings of 7.9 million tons. These quantities are less than one percent of each country's total emissions. Trade with the rest of the world reduced emissions by much larger amounts, roughly four percent of each country's emissions. The sectoral patterns of carbon intensity are strongly correlated between Japan and the US; in addition, greater carbon intensity has a small but significantly positive effect on net exports. Policies that tax or otherwise regulate carbon emissions are needed to discourage this destructive route to competitiveness. However, the most important policy implication may be that US industry could cut its carbon emissions by more than half if it matched the environmental performance of industry in Japan.     

Industrial CO2 emissions from energy use in Korea: A structural decomposition analysis

This paper attempts to quantify energy consumption and CO₂ emissions in the industrial sectors of Korea. The sources of the changes in CO₂ emissions for the years 1990–2003 are investigated, in terms of a total of eight factors, through input–output structural decomposition analysis: changes in emission coefficient (caused by shifts in energy intensity and carbon intensity); changes in economic growth; and structural changes (in terms of shifts in domestic final demand, exports, imports of final and intermediate goods, and production technology). The results show that the rate of growth of industrial CO₂ emissions has drastically decreased since the 1998 financial crisis in Korea. The effect on emission reductions due to changes in energy intensity and domestic final demand surged in the second period (1995–2000), while the impact of exports steeply rose in the third period (2000–2003). Of all the individual factors, economic growth accounted for the largest increase in CO₂ emissions. The results of this analysis can be used to infer the potential for emission-reduction in Korea.