The Dynamics of Structural and Energy Intensity Change

Abstract EN

In this study, an extended structural change model is adopted to explore the mechanisms of how structural adjustments influence the changes of energy intensity.

Through adding an energy production sector to the standard model, we find that the change of sectoral energy intensity is determined by the differences of sectoral and energy production technologies.

Moreover, the change of economy-wide energy intensity is shaped by both structural and sectoral energy intensity changes.

According to theoretical findings and simulation exercises, structural change, initiated by technological growth rate and substitution elasticity, affects the growth rate of economy-wide energy intensity.

(1) If the energy threshold technological growth rates are high or low enough, the overall energy intensity will develop monotonically.

(2) If the energy threshold technological growth rate is moderate, and (i) substitution elasticity and initial final production technological growth rate meet some requirements, the economy-wide energy intensity will grow monotonically; otherwise, (ii) with the suitable combination of substitution elasticity and initial final production technological growth rate, the overall energy intensity can develop nonmonotonically, like U or inverted-U curves.