Decomposing the Effecting Factors of Urbanization on Energy Consumption of China

ABSTRACT

With a rapid growth rate, urbanization is casting a profound impact on both production and residential sector in China, influencing the energy consumption accordingly. Based on theoretical analysis and LMDI (Log Mean Divisia Index) method, the change of energy consumption in the two sectors is decomposed into several effects related to urbanization. According to the empirical result from 1980 to 2012, the change of energy in production sector is the dominating factor of the total energy consumption change in China. Among the effecting factors, the economic growth urged by urbanization is the main factor driving the increase of energy consumption, while technical improvement is the key factor in energy saving. In residential sector, the energy consumption difference between urban and rural residents is also confirmed. Suggestions in reduce energy consumption during urbanization in China are given accordingly.

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