Trends and determinants of energy intensity in China: A study using index decomposition and econometric analysis

Abstract

The Sustainable Development Goal (SDG) 7 underscores the global imperative to accelerate progress in energy efficiency. This paper investigates the drivers of energy intensity changes in China from 2006 to 2022 using provincial panel data, Fisher's Ideal Index decomposition, and fixed-effects econometric models. Results show that efficiency improvements are the primary contributor to reductions in energy intensity, while structural shifts have a limited impact. GDP per capita exhibits a nonlinear effect: growth increases intensity at lower income levels but reduces it at higher levels through rising environmental awareness and shifts toward low-energy products. Energy prices significantly influence intensity and structural effects, though regulatory distortions limit their effectiveness. Fiscal capacity and population growth increase energy demand, highlighting the need for green fiscal investments and energy-saving policies. Regional analysis reveals stronger efficiency gains in central and eastern provinces, while western provinces face resource and technology constraints. The findings support differentiated, regionally tailored policies to achieve sustained energy reductions and low-carbon development.