The Energy Elasticity Of Substitution And Biased Technical Progress For China Industry

With the development of China’s economy, the demand for energy is increasing. Domestic energy supply can not meet the needs of economic development. It is unsustainable.to rely on imports to solve energy shortage. In addition, pollution problem have become increasingly piominent and the pressure of international carbon emissions reduction is rising. So, China has to improve energy efficiency. At present, many countries have used the carbon tax policies to reduce energy consumption and CO2emissions. However, the elasticity of substitution and biased technological progress in various sectors are different. If we don’t have an accurate understanding about the elasticity of substitution biased technological progress and develop the carbon tax policy. It may not be able to achieve the emission reduction targets and it will affect the level of output. But, the literatures on the factor elasticity of substitution and biased technical progress in various sectors of China’s industry are rarely.First of all, the paper analysised energy efficiency of industry by descriptive statistical analysis. It found that energy intensity of various industry are different. Industry consumes most of the energy, but the level of industrial energy efficiency is far lower than the level of overall energy efficiency. The efficiency of high-energy industries and low-energy industries energy is rising, but low-energy industries’energy efficiency is higher than high-energy industries’.Secondly, this paper research elements elasticity of substitution and biased technical progress. It constructed between1994and2008industrial35industry two-digit industry panel data and use standardization of supply-side system to estimate elements of the elasticity of substitution and biased technical progress. The results show that the elasticity of substitution and biased technical progress there are different. But the elasticity of substitution is less than1. So the relationship between energy and non-energy elements is complement. The biased technological progress of industry and low-power industry is labor enhanced and capital biased advances in technology, but high-power industry is labor enhanced and energy biased advances in technology.