Monday, 23 April 2007

Research Paper: Projections of Chinese Energy Demand in 2020

The news that China is about to takeover the US in terms of its total CO2 emissions (although a mile away from any per capita comparison) it a staple of many a newspaper article.

In the following paper Adams and Shachmurove use an econometric model to predict Chinese energy demand in 2020. The reason for posting this article is that I tend to agree with its conclusions. For all the talk of "increased energy efficiency" this will be drowned by the sheer size of the increase in demand for energy particularly from the increased demand for transport (car ownership).

In economics we tend to talk about scale, composition and technique effects when talking about the environmental impact of growth. Whilst new technology will affect the "technique" so that all cars are cleaner, the size of the scale effect means the sheer number of extra cars will outweigh the technique effect by a considerable margin.

"Projections of Chinese Energy Demands in 2020" PIER Working Paper No. 07-012

Northeastern University - College of Business

City University of New York - Department of
Economics, University of Pennsylvania - Department
of Economics

Full Text:

ABSTRACT: As current trends of Chinese economic growth and motorization continue, its demand for higher efficiency fuels (oil, gas, and electric power) will increase. This, coupled with China's limited domestic production, can translate into a massive demand for energy imports. To predict China's energy demand into 2020, an econometric model of the Chinese energy economy is constructed based on its energy balance. This paper suggests that China's increase demand for energy imports will be most sensitive to increases in motorization rather than economic growth. It can be partially offset by increasing domestic energy production or energy efficiency.

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