| Energy conservation is the basic requirements to comprehensively implement the scientific concept of development and promote sound and fast develop economic development. China is faced with the prominent contradictions between rapid develop of economy and society, population growth and resource and environmental constraints. Energy conservation is to reduce resource consumption and waste emissions in the most effective way, and thus solve the development plight which China faced at present. The prime question to be solved is whether energy conservation potential exists and the value of it in energy conservation works.Domestic literature on the energy conservation potential calculation is very limited. It is mainly reflected in two aspects. First, the concept of energy conservation potential is unclear. The vast majority of literature does not give a clear definition when analysing the energy conservation potential. Second, Existing calculation measures with a single point of view ignore the integrated energy conservation potential. In view of this, systematic study on the method and application of energy conservation potential calculation have important theoretical and practical significance, with China's energy constraints and uneven regional development.The paper firstly defines the concept of energy conservaton potential, which is the gap between energy consumption of the existing economic model and the optimal energy consumption with an economic target, and divids into short-term and long-term energy conservation potential. Second, the stochastic frontier parameter analysis method is extended to the field of energy conservation potential calculation. The paper builds a model for the short-term energy conservation potential, based on the derivation of stochastic frontier function of energy consumption. Then the paper analyses gross domestic product, technological progress and industrial structure on impact of long-term energy consumption, using Johansen co-integration to build long-term energy consumption function, and applies this function to establish a long-term energy conservation potential measurement method. Finally, it measures China's short-term energy conservation potential with panel data in 29 provinces district from 1998 to 2007, and China's long-term with national time-series data. The paper sets the stage for the analysis of the contribution and sharing rate in the national energy efficiency goals of the provinces and autonomous regions, and also provides the basic of discussing the decomposition of the national energy conservation target, macroscopic decision and the regional allocation optimization. |