An Empirical Analysis Of Regional Energy Rebound Effect In China

Energy resource is an important production factor behind national economic development. The increasing energy consumption gives rise to substantial impacts on environment, e.g. the growing energy-related CO2 emissions which lead to global warming. Improving energy efficiency has been considered as an effective measure to reduce energy consumption and related pollutions while maintaining economic growth. Due to the existence of rebound effect, however, the energy savings caused by energy efficiency improvement might be partly or fully offset. The expected energy consumption reduction is therefore not achieved. This fact has stimulated researchers and analysts to pay a lot of attention to the energy rebound effect. As China exhibits considerable regional heterogeneities in energy use patterns, this study divides the whole country into four regions, and estimates energy rebound effects of these regions separately. We then further investigate the regional heterogeneities in rebound effects.This thesis first decomposes China's regional energy intensity changes. The decomposition results show the impact of real energy efficiency and industrial structure on the change in aggregate energy intensity. We then propose a quantitative approach to calculate energy efficiency and analyze its trends. A complete decomposition model is applied to decompose the variation in energy consumption, which can be explained by three factors, namely economy factor, structure factor and intensity factor. The contributions of these three factors to economic growth are further measured by using factor production function and translog production function. Considering the impact of energy efficiency, we specify capital stock, labor and effective energy service as inputs whereas GDP as output. The difference of each factor on economic growth can therefore be analyzed. We estimate the correlation coefficient between these variables and eliminate the multi-collinearity. Finally, the energy rebound effects in different regions of China are calculated and analyzed.The empirical results show that during the period 1980-2014 China's overall energy efficiency has improved and a partial rebound effect is found. At the regional level, the four regions showed a rising trend in energy efficiency but varying rebound effect status, during 1986-2013. In 2006-2013, China and regions'energy rebound effects are relatively stable, which stays below 50%. Differences exist between the four regions in terms of energy rebound effect. This study verifies the existence of energy rebound effect in China, and shows that China's energy efficiency policies indeed contribute to reduce energy consumption. Our results also imply that regional heterogeneities in energy efficiency and rebound effect should be taken into account in policymaking.