Research On Energy Substitution Elasticity In Chinese Industries

With the rapid development of economy,the problem of environmental pollution has increasingly got widespread concern.The world is facing a shortage of energy resources,energy waste and other issues.Therefore,energy saving and emission reduction have got concern from countries all around the world.As the largest energy consumer and carbon emission country,China bear a considerable part of the energy saving and emission reduction and environmental improvement tasks.At present,the main problems of China's energy development include energy shortages,greenhouse gas emissions,environmental pollution and other issues.The root cause of this situation is that the energy efficiency is not high and the energy structure is unreasonable.As China's largest energy consumption sector,industry plays a decisive role in improving China's energy efficiency and energy structure.Therefore,it is important to study the energy substitution problem in the industrial sector.On one hand,from the supply side,the energy structure can be improved by increasing the proportion of clean energy consumption,and on the other hand,from the demand side,the energy efficiency can be improved by increasing the capital investment of energy saving.In this paper,we use the two-stage translog cost function of interfactor and interfuel substitution in China's industrial sector,and add the dynamic adjustment mechanism to estimate the energy substitution elasticity of China's industrial sector and 35 industries during 1995-2015.So we can offer different energy saving alternatives to different industries.If we only use the past data to estimate the substitution elasticity,we will be lack of the interpretation and prediction of future energy development direction.Therefore,the paper uses the scenario analysis method to replace the elasticity prediction analysis.We set the baseline scenario and the new normal scenario to estimate the future energy structure and energy consumption,according to the current policy and China's future energy development goals and energy development path map.We build the panel model according to the indicators.The paper uses the translog cost function with the dynamic adjustment mechanism to regress the panel model to calculate the energy substitution elasticity in 2020,2030 and 2050 under the two scenarios,so as to estimate the potential of future energy substitutes for various industries,and to analyze the future energy development strategy and direction to provide policy advice,which fundamentally alleviate the energy shortage and greenhouse effect,and reduce pollution gas emissions.The main conclusions are as follows:Firstly,energy,capital and labor of the overall industrial sector have substitution relationships.The substitution of capital and energy depends mainly on capital investment in energy-saving equipment or energy-consuming equipment,when investing in energy-saving equipment,capital and energy are substitutive;when investing in energy-consuming equipment,capital and energy are complementary with each other.Labor and energy in industrial sector are substitutive but lack of flexibility.In labor-intensive industries we can use the labor force replace energy,but considering China's upcoming population aging restrictions,in the long-term we don't recommend to use labor substitute energy.Secondly,the interfactor have substitution relationship.The discovery is of great significance for China to use clean energy substitute coal.The results show that the use of electricity to replace coal is a better energy alternative strategy,especially for industries which don't have a rigid demand of coal,in which the substitution elasticity between coal and electricity is also larger.Because of the presence of international oil prices and China's oil reserves,it's hard to use oil to substitute coal,but in the short-term it can be promoted.In the future,our direction is still to increase efforts to promote renewable energy to substitute coal and oil.Thirdly,using the scenario analysis method to predict the effect of industrial substitution in China,the results show that there is no significant difference in the elasticity of substitution between the two scenarios of the future energy and non-energy,but the elasticity of interenergy substitution is very different.In the new normal situation,the elasticity of interenergy substitution will be significantly reduced by 2050,mainly because the energy structure has been optimized.Therefore,the energy demand in 2050 mainly comes from the rigid demand,and the substitution space between the energy is limited.According to the forecast results,we need to increase the capital-to-energy substitution in both scenarios.In the new normal situation,the substitution between clean energy and coal can be realized to a large extent.This innovation point of the article:Firstly,the paper studies the substitution elasticity of interfactor and interfuel of different industrial sub-sectors,which can help make different energy saving and emission reduction measures for different industries.The two-stage estimation of energy substitution with the dynamic correction mechanism,take both the feedback effect of interfactor and interfuel substitution and the delay of capital change into account.Secondly,this paper uses the scenario analysis method,setting the baseline scenario and the new normal scenario to forecast the energy substitution effect of the industrial sector in our country.It can not only consider the evolution characteristics of the energy substitution in the past,but also offer quantifiable proposal for the future energy development target.