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Energy resource depletion and environmental degradation have become big challenges for China's sustainable development. Energy efficiency improvement is usually regarded as an major pathway for reducing the pressure on energy and the environment. However, this would be undermined by the rebound effect, because the rebound effect would partially or even totally offset the anticipated of efficiency improvement. Evidence of the rebound effect has important implications for the economic, resource and environmental consequences of improving energy efficiency, as well as enables policy makers to take informed decisions on energy and environmental issues. In this paper, we incorporate the endogenous energy efficiency into the model specification of rebound effect, and build a unified comprehensive framework for analyzing rebound effect and related issues. We applied this framework to conduct empirical analysis and comparison of heavy and light industries, considering heterogeneity across sub-industries. Furthermore, this paper goes beyond simple estimation of rebound effect, and takes additional effort to highlight the policy application via combining energy subsidies and technological progress with rebound effect. [ABSTRACT FROM AUTHOR]

Is it the heavy industry or light industry that performs better in energy efficiency incorporating undesirable outputs? Energy efficiency is the gap between actual and target energy inputs, thus the more energy intensive heavy industry is not necessarily the less energy efficient one. The purpose of this paper is to evaluate and compare the ecological total-factor energy efficiency (ETFEE) of the heavy and light industries as well as to assess their technology gaps. Considering the slack-bias of conventional DEA models and technological heterogeneity between heavy and light industries, the slack-based DEA model (SBM) and meta-frontier technology have been combined. The empirical results show that: (1) China's industries did not perform efficiently. Among them, heavy industry, albeit has more advanced technology, demonstrates lower energy efficiency than light industry. Thus, China needs to stimulate heavy industry to achieve its potential in efficiency improvement. (2) Compared with light industry, governmental stimulus induced expansion has promoted technological advancement in heavy industry, but it still has had no effect on the utilization of existing technologies by, for example, improving the managerial efficiency. Greater pressure on environmental standards is needed to motivate factories in heavy industry to utilize existing technologies more sufficiently. (3) Technological gap among industries has enlarged, thus more attention should be paid on encouraging technology spillover from heavy industry to light industry. [ABSTRACT FROM AUTHOR]

When talking about energy conservation, "Rebound Effect" (RE) is always concerned, which defined as the increasing energy consumption relative to the counterfactual predicted by technological progress because of efficiency induced decrease in the real price of energy services. In this paper, we try to find a way to figure out the RE through calculating the substitution relations accord with the definition. Based on the trans-log cost function and considering the asymmetric impact on energy-cost share equation, the paper applies Allen-Uzawa substitution elasticity to establish the price-oriented analysis diagram of fossil-energy consumption RE. Using time series data, applying the joint method of the dynamic OLS (DOLS) and the seemingly unrelated regressions (SUR), the RE in China's electricity generation sector is estimated. The results showed that the RE is 11.6% in China's electricity generation sector if allowing for asymmetric price effects, which indicates that China's power generation sector generally displays a feature of energy saving. [ABSTRACT FROM AUTHOR]

China, with a heavy dependence on coal power, has announced a clear goal of carbon neutrality by 2060. Electrification of final energy use and high penetration of renewable energy are essential to achieve this. The resulting growth of intermittent renewables and changes in demand curve profiles require greater flexibility in the power system for real-time balancing – greater ability of generators and consumers to ramp up and down. However, the plan and market system with regulated prices makes this challenging. We discuss the options to improve flexibility, including 1) increasing supply-side flexibility, through retrofitting existing power plants to boost their responsiveness; 2) promoting flexibility from power grids, through building an efficient power grid with inter-provincial and inter-regional transmission capacity to balance spatial mismatch, given that China has a vast territory; 3) encouraging demand flexibility, through demand-response measures to enable demand shifting over time and space to address fluctuations in renewable energy generation; and 4) providing flexibility from energy storage. We consider policies to achieve this, in particular, power market reforms to unlock the flexibility potential of these sources. Regulated electricity prices and lack of auxiliary services markets are major obstacles and we discuss how markets in other countries provide lessons in providing incentives for a more flexible system. • Carbon neutrality requires electrification and intermittent renewables. • Discuss options to improve flexibility in power system with high renewables. • Attention to technology and market policies in system with regulated prices and quotas. • Exploring how markets in other countries may provide lessons for China. [ABSTRACT FROM AUTHOR]

China, with a heavy dependence on coal power, has announced a clear goal of carbon neutrality by 2060. Electrification of final energy use and high penetration of renewable energy are essential to achieve this. The resulting growth of intermittent renewables and changes in demand curve profiles require greater flexibility in the power system for real-time balancing – greater ability of generators and consumers to ramp up and down. However, the plan and market system with regulated prices makes this challenging. We discuss the options to improve flexibility, including 1) increasing supply-side flexibility, through retrofitting existing power plants to boost their responsiveness; 2) promoting flexibility from power grids, through building an efficient power grid with inter-provincial and inter-regional transmission capacity to balance spatial mismatch, given that China has a vast territory; 3) encouraging demand flexibility, through demand-response measures to enable demand shifting over time and space to address fluctuations in renewable energy generation; and 4) providing flexibility from energy storage. We consider policies to achieve this, in particular, power market reforms to unlock the flexibility potential of these sources. Regulated electricity prices and lack of auxiliary services markets are major obstacles and we discuss how markets in other countries provide lessons in providing incentives for a more flexible system. • Carbon neutrality requires electrification and intermittent renewables. • Discuss options to improve flexibility in power system with high renewables. • Attention to technology and market policies in system with regulated prices and quotas. • Exploring how markets in other countries may provide lessons for China. [ABSTRACT FROM AUTHOR]

Given that China is committed to peak its carbon dioxide emissions in or before 2030 under the Paris Agreement, promoting renewable energy to substitute coal is one critical solution to facilitate China to meet this commitment. Among various types of renewable energy, solar energy is an attractive choice that will significantly influence the future of energy supply and energy usage. We first provide an overview of the most recent development of solar energy in China, in which the changing pattern from stationary to distributive forms is highlighted. We show that the diversified prices and subsidies across regions may play an important role in the changing pattern. Furthermore, we find major challenges that might impede the future expansion of solar energy. To address these challenges, governments need to propose policies to develop technologies and meditate the benefits of stakeholders, especially grid companies and electricity end-users. Market-based policies are also expected to accelerate the learning-by-doing process through R&D investment, which will help reduce and ultimately eliminate solar subsidies. • An overview of the most recent development of solar energy in China. • A new pattern from stationary to distributive forms of solar energy is highlighted. • Reasons for the changing pattern: Diversified prices and subsidies. • Challenges and policy options for the expansion of China's solar energy. [ABSTRACT FROM AUTHOR]

Emissions from heavy urban traffic have been the most abundant components of urban air pollution in China. Compared to the fast increasing consumption of automobile, the growth rate of urban traffic infrastructure investment (UTII) is relative low. It is a controversial issue for the policymaker whether promoting the UTII could make a positive impact on reducing air pollution or not. This study is designed to test the relations between the UTII and air quality, using the data of 83 cities from 2000 to 2012. Based on the empirical results from the fixed effect model and dynamic panel data model, increasing the UTII could generally mitigate the air pollution, but the long-run and short-run effects are significantly different. In the short run, the UTII effect on air quality is −0.02, since the urban traffic infrastructure construction might cause more detours and road blockages, which would enhance the fine-particle emissions of the low-speed traffic. In contrast, the UTII could widen the roads and make the traffic system more accessible in the long run, so the estimated positive effect is about 0.05. The robustness tests about different regions and scales of cities are conducted. Policy suggestions are further recommended to reduce air pollution. [ABSTRACT FROM AUTHOR]

China receives great global attention for its energy consumption. To implement effective and fair policies to save energy, it is critical to understand what drives China's energy consumption and regional disparities. Most of previous studies failed to include indirect factors embodied in the inter-sectoral and regional input-output flows. Therefore, a hybrid structural decomposition analysis is conducted to explore drivers of energy consumption and regional disparities. The results present: (1) energy, directly or indirectly, is flowing from coastal regions to Northwest, Southwest and Central China. (2) The growth of residents' income to contribution of energy consumption is by 106.7% and 169.8% during 2002–2007 and 2007–2012, respectively. Meanwhile, the positive impact of income on energy consumption is larger in urban than rural areas, and the structure effect has a significantly negative impact on energy consumption in Northwest and Southwest regions. (3) By factors, the substitution effect non-energy to energy inputs in industry sector might bring more energy consumption. By sectors, the technological advancement of the non-industry sectors decreases energy consumption by 31.7% and 174.6% during 2002–2007 and 2007–2012, respectively. Technological advancement of industry sectors plays the most important role in increasing energy consumption across China. [Display omitted] • Developing a hybrid structural decomposition analysis to capture drivers of energy consumption and regional disparities. • Income effect is more important than structure effect to explain increase of energy consumption. • The impacts of technical progress on energy consumption vary by regions, factors and sectors. • The industry and income effect contribute most to the increase in the energy consumption. [ABSTRACT FROM AUTHOR]