Impact of industrial agglomeration on energy efficiency in China’s paper industry

Guiding industries to produce in an effective and environmentally sustainable manner has become a key issue for governments around the world. Over the past 15 years, series of regional and industrial development policies have been introduced by the Chinese government. This has influenced the geographical distribution and energy efficiency performance of China’s industries. This paper quantifies the influence of enterprises geographical distribution on energy efficiency improvement in the paper industry and aims at providing some helpful suggestions on industrial development to policy makers. The main results show that, firstly, the paper industry in eastern China shows obvious characteristic of agglomeration. The average location quotient is 1.2278. However, following the industrial and regional development policies, the characteristic of agglomeration is weakening. Secondly, only when agglomeration reaches a certain level (location quotient is above 0.5447) will industrial agglomeration positively impact on industrial energy efficiency improvement (a 1% increase in agglomeration will increase dynamic energy efficiency by at least 0.23%). Thirdly, the regional development policies carried out by the government slow the pace of energy efficiency improvement in China’s paper industry. The empirical results indicate that the government needs to consider regional characteristics and consciously guide industrial enterprises to concentrate in the dominant area.