The Dynamics of Structural and Energy Intensity Change

In this study, an extended structural change model is adopted to explore the mechanisms of how structural adjustments influence the changes of energy intensity. Through adding an energy production sector to the standard model, we find that the change of sectoral energy intensity is determined by the differences of sectoral and energy production technologies. Moreover, the change of economy-wide energy intensity is shaped by both structural and sectoral energy intensity changes. According to theoretical findings and simulation exercises, structural change, initiated by technological growth rate and substitution elasticity, affects the growth rate of economy-wide energy intensity. (1) If the energy threshold technological growth rates are high or low enough, the overall energy intensity will develop monotonically. (2) If the energy threshold technological growth rate is moderate, and (i) substitution elasticity and initial final production technological growth rate meet some requirements, the economy-wide energy intensity will grow monotonically; otherwise, (ii) with the suitable combination of substitution elasticity and initial final production technological growth rate, the overall energy intensity can develop nonmonotonically, like U or inverted-U curves

Theoretical Explanations for the Inverted-U Change of Historical Energy Intensity

Historical experience shows that the economy-wide energy intensity develops nonmonotonically like an inverted U, which still lacks direct theoretical explanations. Based on a model of structural change driven by technological differences, this paper provides an attempt to explore the underlying mechanisms of energy intensity change and thus to explain the above empirical regularity accompanied by structural transformation, through introducing a nested constant elasticity of substitution production function with heterogeneous elasticities of substitution. According to some reasonable assumptions, this extended model not only describes the typical path of structural change but also depicts the inverted-U development of economy-wide energy intensity. With the availability of Swedish historical data, we take calibration and simulation exercises which confirm the theoretical predictions. Furthermore, we find that: (1) elasticities of substitution may affect the shapes and peak periods of the inverted-U curves, which can explain to a certain extent the heterogeneous transitions of economy-wide energy intensity developments in different economies; and (2) over long periods of time, the economy-wide energy intensity determined by the initial industrial structure and sectoral energy intensity tends to grow upward, while structure change among sectors provides a driving force on reshaping this trend and turning it downward

China’s Industrial Total-Factor Energy Productivity Growth at Sub-Industry Level: A Two-Step Stochastic Metafrontier Malmquist Index Approach

Under the concept of metafrontier, technology gap ratio is alternatively interpreted as potential energy efficiency. Combined with Malmquist index framework and Shephard energy distance function, we then develop a metafrontier Malmquist energy productivity index to analyze the total-factor energy productivity growth with four specific components: groupfrontier efficiency change index, groupfrontier technological change index, efficiency catch-up index and technological catch-up index. Methodologically, a newly developed two-step stochastic metafrontier analysis is applied to address the potentially biased estimation problems in the previous mixed approach. This analytical framework is used to evaluate the energy productivity growth of China’s 35 sub-industries in industrial sector from 2001 to 2015. The main empirical results show that: (1) In terms of cumulative metafrontier Malmquist energy productivity growth, China’s overall industry has witnessed a 25% growth and a U-shaped growing trend bottoming out in 2006; meanwhile, 19 sub-industries have suffered an energy productivity loss and the remaining 16 sub-industries have experienced an energy productivity gain. (2) From the technology heterogeneity perspective, light industry outperforms heavy industry in metafrontier Malmquist energy productivity growth, while the intra-group and inter-group energy productivity develops roughly in balance for overall industry. (3) The change of metafrontier Malmquist energy productivity is mainly driven by technological change components rather than efficiency change components. On average, groupfrontier technological change makes the biggest contribution to energy productivity growth, followed by technological catch-up, then efficiency catch-up, and groupfrontier efficiency change is last. (4) The metafrontier Malmquist energy productivity growth has shown a significant convergence in heavy industry and light industry, as well as overall industry