Chinese Economic Development and the Environment
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Chinese Economic Development and the Environment

  • New Horizons in Environmental Economics series

Shunsuke Managi and Shinji Kaneko

Over the past two decades, China has become an economic powerhouse. However, as the world’s largest producer of CO2 emissions, the scale and seriousness of China’s environmental problems are clearly evident. This pioneering book provides an economic analysis of the significant environmental and energy problems facing China in the 21st century.
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Chapter 11: Energy Supply-Side and Demand-Side Effects

Shunsuke Managi and Shinji Kaneko


11. 1 Energy supply-side and demandside effects INTRODUCTION Over the past two decades, the energy intensity of China’s economy has fallen rapidly at a rate unparalleled in any other country at a similar stage of industrialization (Fisher-Vanden et al., 2004; Wu et al., 2005). After 1996, the income elasticity of energy consumption even shifted from positive to negative, accompanied by an unprecedented decline in energy-related CO2 emissions. This shift was contrary to all previous forecasts, which predicted that China’s energy consumption and CO2 emissions would continue to rise during the next five decades (for example, Ho et al., 1998; Yang et al., 1998; IPCC, 2000; EIA, 2004). Our estimates based on newly released energy statistics (NBS, 2004) indicate that energy-related CO2 emissions kept declining during the years from 1996 to 2000 and rebounded in 2001 and 2002. What happened to China’s energy system over the period from 1980 to 2002, especially from 1996 to 2000? What are the dominant underlying forces driving the unique pattern of change in energy use and CO2 emissions? In particular, what is the relative importance of those underlying forces? What factors created the ultimate economic and political impetus behind those underlying forces? A variety of studies have attempted to answer these questions. Index decomposition analysis (IDA), a commonly accepted analytical tool for decomposing the historical evolution of energy or environmental indicators into the contributions of a number of pre-defined factors of interest, has been widely applied for this purpose (see some review papers: Ang, 2004;...

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