China's Energy Strategy: Economic Structure, Technological Choices, and Energy Consumption

Variations in energy growth rates, however, had almost no effect on the structure of energy consumption in China. As is shown in table 2.3 and figure 2.1, the distribution of total energy consumption among different sectors and individual energy types was stable and remained almost unchanged between 1981 and 1987. This suggests that, overall, changing energy mix and sectoral distribution of energy consumption were not the primary cause of energy- intensity decline between 1981 and 1987.

One of the main purposes of this study is to draw connections between the energy-use changes from 1981 to 1987 and changes in the economy. Energy is used in a large number of diverse economic activities undertaken by many different types of actors ( Schipper and Meyers, 1992). We group the causes of changes in energy into two categories: (1) changes in what final goods and services people consume (final demand), and (2) changes in how those goods and services are produced (production technology). In subsequent chapters of this study, we will link energy-use changes between 1981 and 1987 to changes in final demand and production technology and identify the main factors that were responsible for the energy-intensity reduction. Energy consumption in China's economy, for example, will increase if consumers purchase more final goods and services or if they shift their spending patterns from less energy-intensive products, such as services, to more energy-intensive ones, such as durable manufactured goods, everything else being equal. This increase, however, may be moderated or counterbalanced by the introduction of alternative production technologies that reduce the amount of energy input used to produce final goods and services. Various elements of final-demand shifts and production-technology changes are at work simultaneously; they may be either reinforcing or offsetting. Using a structural-decomposition analysis, we will identify those elements, quantify their individual energy impacts, and determine their combined effect on the aggregate energy consumption of China's economy.

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