Can Chinese household consumption become more energy efficient? Analysis based on input-output and demand system models

To gain a comprehensive understanding of the role that household consumption has in the transition to a lowcarbon economy, analyses of household energy use (HEU) should focus on total HEU that includes direct and indirect energy use. We examine the major factors of total HEU efficiency using input-output and Quadratic Almost Ideal Demand System models. The analyses are based on time-series non-competitive input-output tables at constant prices for 1986-2018 compiled by this study, industrial energy satellite accounts, and the data from the Chinese Household Income Project. First, the findings reveal that while total HEU is increasing rapidly, HEU intensity has declined, suggesting that household consumption has become more energy efficient. However, the primary cause is the reduction of energy intensity in production sectors rather than the household consumption structure. Second, HEU will continue to rise with advancing urbanization and expected income increasing in the future. Furthermore, changing consumption patterns may increase urban and rural HEU, with an increasing share of household facilities, transportation, and communication further driving energy use in upstream industries. Therefore, the key to improving HEU efficiency is more strongly related to technological advances on the production side than changing consumption patterns. Energy policy should primarily focus on promoting industrial technological advances and measures to advance circular economy development.