The driving forces of China's energy use from 1992 to 2010: An empirical study of input–output and structural decomposition analysis

The energy consumption in China has accelerated since the early 2000s, and China became the largest energy consumer in the world by 2010. To examine the driving forces of China's energy use, this paper conducts a structural decomposition analysis based on hybrid input–output tables. In addition, we describe the framework of China's energy system by using two energy flow charts. The results show that China's current energy use is investment-led demand. Between 1992 and 2007, the three main final-demand categories – gross fixed capital formation, household consumption and exports – contributed approximately one-third each to the changes of total energy use in China. Between 2007 and 2010, however, three-quarters of energy consumption changes came from investment activity only. Technological improvement saved approximately five percent of the total energy use annually during the periods of 1992–1997, 1997–2002 and 2007–2010. In the period of 2002–2007, however, its contribution dropped to only three percent p.a. due to the rise of the indirect energy requirement coefficient in the construction sector. These results suggest that adjusting the final demand structure and improving energy efficiency further will meet China's energy challenges in the future. - Highlights: • Hybrid energy I–O models on both energy supply and demand side are developed. • Two energy flow charts are provided to describe China's energy system. • Analysis of structural change, and technology change effects on China's energy use. • China's current energy consumption is export and investment driven demand. • Policy implications of the structural decomposition analyses are discussed