Implications of Energy Intensity Ratio for Carbon Dioxide Emissions in China: Fid-Bau Portal

Implications of Energy Intensity Ratio for Carbon Dioxide Emissions in China

Jiabin Chen / Shaobo Wen

Industrial carbon dioxide (CO₂) emissions are mainly derived from fossil energy use, which is composed of procedures involving extraction of energy from the natural system as well as its exchange and consumption in the social system. However, recent research on low-carbon transitions considers the cost of energy commodities from a separate perspective—a biophysical or monetary perspective. We introduce the energy intensity ratio (EIR), which is a novelty perspective combining biophysical and monetary metrics to estimate the cost of energy commodities in the low-carbon energy transitions. This combination is essential, since the feedback of energy into the biophysical system will influence the performance of energy in the economic system and vice versa. Based on the Logarithmic Mean Divisia Index (LMDI), we developed the EIR-LMDI method to explain the changes in CO₂ emissions. The changes in CO₂ emissions caused by the EIR are the net energy effect. In China, the net energy effect kept CO₂ emissions at a compound annual growth rate of 6.15% during 2007–2018. Especially after 2014, the net energy effect has been the largest driver of the increase in CO₂ emissions. During the study period, high net energy usually indicated high CO₂ emissions. Coal is the most important energy commodity and dominates the net energy effect; the least volatile component is the EIR of natural gas. The EIR affects CO₂ emissions by the price crowding-out effect and the scale expansion effect, which make the process of low-carbon transition uncertain. The results illuminate that policymakers should monitor the net energy effect to prevent it from offsetting efforts to reduce energy intensity.