Industrial Structural, Energy Saving And Emission Reduction Of China: An Econometric Analysis

Since2006,―energy conservation and emission reduction‖has become an essentialpart of China’s sustainable development strategy. From historical data, the heavierindustrial structure is a significant source of energy consumption, and industrialadjustment and upgrading is an important entry point and main measure for governmentsto implement―energy conservation and emission reduction‖. From the previousdocuments about the relationship between industrial structure and energy/carbon intensityof China, the main methods are linear regression model and index decomposition methods.However, because of economic cycle and macro-control, China’s industrial structure has atypical non-linear characteristics, which led to the existing research conclusions are ofteninconsistent with the reality, and its policy recommendations have limitations. Based onthe data characteristics and the theory of energy economy, this thesis applied latest andproper econometrical models to analysis the relationship between industrial structure and―energy conservation and emission reduction‖of China. This research is expected toproduce some conclusions in line with the actual situation of China, and give someinspiring policy recommendations. The main research contents and conclusions and itsinnovative profile are as following:(1) Based on the results of different theories and methods, the effects of industrialstructure (measured by the ratio of industry added value to GDP) on energy intensity(measured by energy consumption per unit of GDP) are variously in different periods ofChina. According to data features between industrial structure and energy intensity during1980-2009, this paper applied a threshold cointegration model to analysis the nonlinearrelationship between them. The results exposes that industrial structure has nonlineareffects on energy intensity when industrial structure is around40.435%: during the periodsof1983-1994,1998-2002and2009, the industry/GDP was declined, and industrialstructure produced negative effects on energy intensity weakly and discontinuously; during the periods of1980-1982,1995-1997and2003-2008, the adjustment ofindustry/GDP was not conducive to the reduction of energy intensity. This conclusionsuggests that readjusting the industrial structure and transforming the pattern of economicgrowth are long-term strategies for sustainably pushing the decline of energy intensity. Inshort-term, it suggests readjust the industry/GDP to below than40%. Compared with theexisting research literatures, the conclusions of this study clearly shows the direction andmagnitude of structural adjustment in China.(2) Based on the Kaya identity and the data characteristics of China’s economicgrowth and structural adjustment, a nonlinear model was tested and estimated in order toreflect whether the effects of structural adjustment on carbon intensity were subject toeconomic growth or not. The results show that if the rate of economic growth is higherthan9.053%, industrial structure and energy mix were not conducive to decline in carbonintensity. Furthermore, the scenario analysis which depends on the Monte Carlosimulation show that the expected values of the average annual decrease rate of China’scarbon intensity are4.34%(2011-2015) and3.51%(2016-2020). It means the carbonintensity in2020is expected to decline by41.19%compare to2005. It also suggests thatthe rate of economic growth in the interval of7%to8.4%can contribute to carbonemission reduction. Obviously, the positive analysis of the nonlinear model is fully reflectsChina’s economic background and carbon emission‘s characteristics, and simulation-basedscenario analysis eliminate subjective factors in similar studies, so the conclusion is robustand rationality. Therefore, the conclusion of the study has an important application valueand practical significance for China‘s carbon emission reduction in the future.(3) There is a significant difference of resource allocation in different provinces ofChina, but past papers about energy efficiency often ignore it. Take account of theheterogeneity of resource allocation in provinces, this paper takes rationalization ofindustrial structure as a threshold variable, and uses a threshold effects stochastic frontiermodel to analysis the total factor energy efficiency. The test and estimate results show thatthe economic growth of the different provinces has three technological clubs, and the more reasonable of industrial structure, the higher total factor energy efficiency. Furthermore,the decomposition results show that the less rational industrial structure, the highercontribution of factor inputs, especially the capital investment, on economic output, andthe lower contribution of technological progress on economic output. The aboveconclusions mean that change the economic growth pattern, and enhance the level ofrationalization of the industrial structure by technological progress are effective ways toimprove energy efficiency.(4) Because carbon emission generates by energy consumption, this paper usesenvironmental directional distance functions, which is estimated by super-DEA model toimprove the efficiency frontier provinces‘estimators, to calculate the total-factor energyefficiency (TFCE). Then, it uses some panel data models to examine the relationshipbetween economic growth pattern, which is characteristic by investment driven, theindustrial structure adjustment and the total-factor energy efficiency. The results indicateChina‘s economic growth pattern is not benefit to improving TFCE; labor flow betweenindustries produces "structure bonus" on TFCE, and capital flow between industriesproduces "structure burden" on TFCE; the change and upgrade of manufacturing industrystructure doesn‘t benefit to improve energy efficiency, but it is help to enhance TFCE.These conclusions indicate that it is long-term ways to improve energy/carbon efficiencyby transforming economic growth pattern, and getting rid of the barriers betweenindustries, and enhancing the optimization of manufacturing structure by digestion andabsorption of new international technology and self-innovation. Compared with theexisting literatures, this article provides a new perspective and a new evidence forimplement―energy conservation and emission reduction‖through industrial structure fromthe rationalization of industrial structure and the optimization of manufacturing structure.