China's energy intensity and its determinants at the provincial level

Energy intensity is defined as the amount of energy consumed per dollar of GDP (Gross Domestic Product). The People's Republic of China's (China's) energy intensity has been declining significantly since the late 1970s. The first part of this thesis is a direct descriptive statistical analysis at both the national level and provincial level. Regional variation in terms of energy production and consumption is pronounced especially between the inland provinces and coastal provinces. The role of railway transportation in moving coal from the inland regions to the coastal regions is studied. I find that the capacity limit of railways has indirectly affected the decline of China's energy intensity. The second part adopts methodology similar to that used by Sue Wing (2008), as well as Metcalf (2008) paper. I have created two indexes to decompose changes in energy intensity into intra-province (efficiency) and inter-province (structural) effects. Efficiency change refers to the energy-intensity reduction within a particular province due to factors such as fuel prices, temperature, economic sector shift, infrastructure investment, etc. The structural change refers to the change of energy intensity due to the growth of the share of provincial output in total GDP, such as when less energy-intensive provinces increase their share of output in total GDP. I find that the efficiency change has outperformed the structural change over the sample period of 1988-2006. The third part identifies and tests the potential factors that may positively or negatively contribute to the reduction of energy intensity within each province.