• Energy Research
• 11. Sustainability close

Abstract China’s ambitious decarbonization strategy disaggregates the national energy conservation target by province. Using panel data of 30 provinces for 1995–2017, we revisit China’s energy-growth nexus that considers the likely cross-section dependence among the provinces within each of China’s three regions. Our key finding is a bidirectional causal relationship of energy (natural log of per capita energy consumption) and income (natural log of per capita real GDP) for the Eastern and Central regions and a unidirectional causal relationship from income to energy for the Western region. The Eastern and Central regions’ bidirectional relationship suggests caution in China’s energy conservation policy which may decelerate these regions’ economic growth. The Western region’s unidirectional relationship suggests promoting energy conservation without adversely affecting this region’s economic growth. Hence, the East and Central regions’ conservation effort should be accompanied by cost-effective development of emissions-free renewable resources like hydro, solar and wind for displacing China’s fossil-fuel consumption.

This paper estimates the daily kWh responses on a working weekday of 1326 single-family-home residents who voluntarily participated in a residential optional dynamic pricing (RODP) pilot in the winter-peaking coastal province of British Columbia (BC) in western Canada. Based on the pilot’s operation in November 2007-February 2008, we estimate that the kWh reduction in the peak period of 4-9 pm on a working weekday sans an in-home display (IHD) is: (a) 2.2% to 4.4% at time-of-use tariffs with peak-to-off-peak price ratios of 2.0 to 6.0; and (b) 4.8 to 5.3% at critical peak pricing tariffs with peak-to-off-peak price ratios of 8.0 to 12.0. The IHD approximately doubles these estimated peak kWh reductions. As BC residents already have smart meters with an IHD function, these findings recommend exploring the use of a system-wide RODP program to improve the BC grid’s system efficiency.

While price responsiveness of residential demand for natural gas has important implications on resource planning and energy modelling, its estimates from prior studies are very diverse. Applying panel data analysis and five parametric specifications to monthly data for the lower 48 states in 1990–2019, we estimate own-price elasticities of residential demand for natural gas in the United States (US). Using results from cross-section dependence (CD) test, panel unit root tests, panel time-series estimators, and rolling-window analysis, we document: (1) the statistically significant (p-value ≤ 0.05) static own-price elasticity estimates are −0.271 to −0.486, short-run −0.238 to −0.555 and long-run −0.323 to −0.796; (2) these estimates vary by elasticity type, sample period, parametric specification, treatment of CD and assumption of partial adjustment; (3) erroneously ignoring the highly significant (p-value < 0.01) CD shrinks the size of these estimates that vary seasonally, regionally, and nonlinearly over time; and (4) residential natural gas shortage costs decline with the size of own-price elasticity estimates. These findings suggest that achieving deep decarbonization may require strategies that do not rely solely on prices, such as energy efficiency standards and demand-side-management programs. Demand response programs may prove useful for managing natural gas shortages.

Were the large investments in energy and transportation infrastructure effective in fostering economic growth? Or did economic growth trigger these infrastructure developments? To answer these questions, we develop a simple model of production capacity constraints and use China’s Western Development Strategy (WDS) as an example to investigate how the relationships among energy investment, transportation infrastructure expansion and economic growth differ in the pre- and post-WDS periods. Our Granger causality analysis uses a panel data sample for China’s 30 provinces in the Western and non-Western regions for the period of 1991-2012. We find Granger causality only in the post-WDS period from transportation infrastructure expansion to economic growth and from economic growth to energy investment. These results suggest energy and transportation capacity constraints in the post-WDS period but not the pre-WDS period. Their policy implication is that China should continue its energy and transportation infrastructure investments with improved coordination.

Hong Kong residents’ willingness-to-pay estimate for a 30 percent emissions reduction via natural-gas-fired generation is an 18 percent annual electricity bill increase, twice the estimate for nuclear power. Since these WTP estimates are below the projected bill increase required to achieve the government's emissions reduction target, they suggest that a narrow supply-side focus on the generation fuel mix may not be publicly acceptable. The solution is a more comprehensive policy that would include energy efficiency investment and vehicular emissions reductions.