Energy Structure And Economic Growth Model Conversion In China

Upgrading industrial structure and adjusting energy structure are two critical paths of transforming economic growth model. Adjusting the industrial structure can significantly reduce energy consumption and carbon emissions from the source. Adjusting the energy structure can reduce carbon emissions by replacing high-carbon energy consumption. The feasibility of adjusting the energy structure depends on the substitutability of inter-fuel and inter-factor. The measure of substitutability is the elasticity of substitution. By measuring the elasticity of substitution, we can clearly know whether the relationships of inter-fuel and inter-factor are alternative or complementary, as well as the extent of this relationship.This paper is divided into three main sections. Firstly, this paper analyses the changes and differences in industrial structure, energy structure and the corresponding energy (coal) intensity in one decade, based on provincial cross-sectional data in 2009 and 2000. It is found that due to resource endowment and different industrial structure, China shows different growth patterns in provinces. Overall, Lighten the industrial structure and reduce carbon intension in energy structure should be a common direction.Secondly, to achieve low-carbon energy mix and carbon emission reduction targets, we must know the substitutability between factors. This paper based on the translog cost function and AES substitution, estimates China's inter-fuel and inter-factor elasticity of substitution, cross-price elasticity, auto-price elasticity. The research of inter-fuel discovered the substitution relationship of electricity to oil and coal, the complementary relationship between coal and oil. But the effects between fuels are weak, the price elasticity is insufficient. The research of inter-factor found that the relationship of labor to energy is substitute, the relationship between capital and energy is complementary. So at this stage, it is unrealistic to achieve energy saving target simply through capital subsidies. In addition, we also found that the energy output elasticity is less than one; hence, if we do not improve the energy elasticity of substitution, the inevitable consequence of the increased output is energy prices rising.Finally, this paper suggest that to achieve the economic growth model conversion, we should establish the alternative energy strategy by accelerating the pace of energy price reform, adjust and optimize the energy and industrial structure relying on technology upgrade.