Study On Determinants Of China's Energy Efficiency

The supply constraints and importance of energy have been embodied in the huge impacts of energy price fluctuations to global economy. Energy shortage has called for China to make improvements of energy efficiency the focus of its economic development. This paper discusses determinants of China's energy efficiency and thereby comes up with policy suggestions of energy efficiency improvements.This paper contains three sections. The first section analyzes the corresponding impacts of industry structure shift and real energy efficiency improvement within each industry to the overall energy efficiency by decomposition analysis. Results show that intensity effect dominates energy efficiency improvements over structure effect, while both take effect within different time periods.The second section furthers research into provincial level. After calculating energy consumption data of particular industries of 30 areas in China and conducting segmentation, this paper analyzes and compares different modes of energy efficiency improvements according to different degrees of structures effect and intensity effect within different areas. Results show that, while huge differences exist across areas, the "intensity effect over structure effect" mode prevails China's provinces.The last section echoes determinants analysis within each industry in the first section. Regression analysis shows that R&D, energy price, energy consumption mix and industry structure are four determinants of China's energy efficiency. Therefore, policy suggestions regarding these four determinants are provided: optimizing industry structure, adjusting energy price mechanism, increasing R&D spending and developing new energy.