Analysis On China's Energy Rebound Effect Based On Technology Progress

Since the national adoption of the "reform and opening" policy,China's economy has been on a continuous rise,and so is its rate of energy consumption.Yet the less optimized domestic energy structure and overall low efficiency have contributed to a chain of environmental concerns:poor power transmission,high energy consumption,and stronger carbon emissions.To restore the balance between the ever-growing energy demand and the limited supply,while containing the environmental damage,new technologies are needed to improve energy efficiency,and to ensure coordinated progress of clean energy,economic development and environmental protection.However,there is one dilemma that innovations may produce--the "Energy Rebound Effect(ERE)",in which the lowered energy costs,as a result of the cheaper new forms of energy will serve as an economic stimulant,leading to even more spending on energy.ERE is therefore a critical factor that influences energy consumption and should be taken into consideration during the policy making process to help ensure positive energy outcomes.This study focuses on understanding and estimating the impact of ERE in various scenarios and is presented in four sections.The first section outlines the latest progresses and literatures on ERE,laying the ground work for further research.The next section summarizes key concepts and theories of ERE and provides hypotheses that may underlie ERE's mechanisms.In the following section,which is also the main body of this paper.I analyzed the impacts of technological progress on energy consumption and developed an ERE prediction model using the Solow Residual Method and the LMDI Decomposition Method.The model estimated the domestic ERE values between 1986 and 2014 based on the macroeconomic data.The key findings are:1)the average ERE in China was 73.57%,with an inverted-U shape trend;2)ERE demonstrated prominent temporal and spatial relationship,even was not observed in every calendar year;3)ERE occurred more frequently in the eastern and central regions of the country than in the western provinces;4)the 7th-and the 10th-"five year plan" periods showed less ERE than other durations;and 5)all jurisdiction areas in China had certain degree of backfire effects.The final part of the paper lays out four suggestions that could be considered to streamline the energy policy:1)technology innovation to improve energy efficiency,2)higher tax to increase energy cost,3)discriminatory pricing to regulate demand,and 4)development of new energy to upgrade the energy structure.Highlights of the current research include:1)developed an ERE prediction model using the combined strengths of Nonparametric Time-Varying Coefficient Model and LMDI Decomposition Method;and 2)dissected the characteristics of ERE in a multidimensional fashion,such as its temporal-spatial relationship,and helped better understand the ERE status quo in China.