STRUCTURAL DECOMPOSITION ANALYSIS ON CHINA'S ENERGY INTENSITY CHANGE FOR 1987-2005

There has been considerable debate about the major factors responsible for the dramatic decline of China's energy intensity in the 1980s and 1990s. However, few detailed analysis has been done to explain the fluctuation in energy intensity during 2002-2005. In this paper, we use the structural decomposition analysis (SDA) to decompose energy intensity into five determining factors: Energy input coefficient, technology coefficient (Leontief inverse coefficient), final demands structure by product, final demands by category and final energy consumption coefficient. We then further decompose two coefficients, energy input coefficient and technology coefficient, into structure and real coefficient. Empirical study is carried out based on the energy-input-output tables from 1987 to 2005 in 2000 constant price. The results show that between 1987 and 2002, energy input structure accounts for most of the decline in energy intensity. However, the input structure and final demands structure by product explain the increase of the energy intensity between 2002 and 2005.