As the largest developing country undergoing rapid industrialisation, the industrial sector is the largest energy consumer in China. It accounted for 68.4% of the country’s total energy consumption in 2012 [1
], which was much higher than the global average of 33% [2
]. Hence, China has always focused on industrial energy conservation to achieve a low-carbon transition. During the 11th Five-Year Plan (2006–2010), China achieved a reduction of 26% in industrial energy intensity [3
], defined as energy consumed for each unit of industrial output. In the 12th Five-Year Plan (2011–2015), the government aims to achieve a further reduction of 21% [3
]. Despite these efforts, overall industrial energy consumption continues to increase at a rapid pace. In response, the government has begun to further strengthen control over total energy consumption, with an overarching target of capping it at 4 billion tons of Standard Coal Equivalent (SCE) by 2015 [4
] and 4.8 billion tons of SCE by 2020 [5
]. However, doing so poses great challenges to the economic development of some parts of China, such as the old industrial regions which depend on energy-intensive industries.
The problem of achieving a balance between industrial development and low-carbon transition is the most acute in Northeast Old Industrial Base (NOIB: Liaoning, Jilin, and Heilongjiang provinces), which was developed into China’s industrial heartland during the Maoist period. As Mao pursued a heavy industrialisation strategy, this region became a production base for coal, crude oil, pig iron, steel, automobiles, machine tools, tractors, and cement [6
]. In 2012, the industrial sector accounted for 68.7% of the total energy consumption in NOIB, of which 97% was generated from fossil energy (a slight decrease from 99% in 2003), especially coal and oil [7
]. The industrial dominance of the region, however, declined rapidly during the reform period. The region was severely affected after the central government shifted its focus to developing coastal regions and by a series of economic liberalisation reforms that bankrupted many uncompetitive state-owned enterprises [13
]. From 1980 to 2004, the northeast’s percentages of gross national production and industrial production value decreased from 13.7% and 17.8% to 9.3% and 9.6%, respectively [14
]. Whereas the coastal region prospered during the reform period, the northeast gradually declined into one of the largest rustbelts in China, if not in the world, characterised by a high level of unemployment, foreclosure, and economic stagnation.
In response to this situation, a regional development strategy known as the Northeast Old Industrial Base Revitalisation Strategy was implemented in 2003 by the central government with the goal of reviving the traditional industries in this region and transforming it into a new engine of economic growth. Different from strategies adopted in other rustbelts around the world, such as Lorraine in France, Kyushu in Japan, and Pittsburgh in the United States, the strategy seeks to reverse the decline by primarily upgrading existing industries rather than introducing new industries in the services sector [15
]. During 2003–2012, the value added of the industrial sector grew at a rapid rate of 17.2% annually, which was higher than the national average of 15.4% [16
]. The revitalisation of the industrial sector since 2003 has strong implication for energy consumption in the region. The annual energy consumption increased by only 1.6% during 1995–2003; however, this figure increased by 6.6% during 2003–2012 [7
]. This rapid increase was sustained by increased energy imports from other regions: coal imports increased from 75.4 million tons in 2003 to 237.6 million tons in 2012, whereas oil imports increased from 36.7 million tons in 2003 to 46.5 million tons in 2012. In addition, the energy-related CO2
emission of the industrial sector rose from 464.5 million tons in 2003 to 822.8 million tons in 2009 [21
]. The revitalisation of the industrial sector has become a challenge for China as it seeks to achieve energy security and transition to a low-carbon economy.
Since the industrial sector plays such a dominant role in the economic revitalization and energy conservation of NOIB, this study aims to examine the changes in industrial energy consumption and its driving factors since the implementation of the NOIB Revitalisation Strategy, so as to provide policy recommendations for a greener and more sustainable industrial revitalisation strategy. The remainder of this paper is organised as follows: Section 2
presents a literature review; Section 3
describes the research methodology including data collection and analysis; Section 4
presents the analysis results; and, finally, Section 5
concludes the study.
2. Literature Review
Since the early 1980s, many studies have attempted to quantify the relative impact of different factors on changes in energy consumption and related carbon emissions by using various kinds of decomposition models. China has been featured prominently in the discussion because of the rapid growth of energy consumption and carbon emissions. These studies can be categorised into two groups based on the scale of analysis (Table 1
). Studies conducted at the national scale indicated that in the past three decades, China’s energy consumption and energy-related CO2
emissions increased rapidly with the exception of the late 1990s “sudden stagnancy” [22
]. Despite differences in methods, timelines, and variables, the general consensus among this group of studies is that the increased CO2
emissions and energy consumption derived mainly from the growing energy demand due to the expansion of production scale, whereas the intensity effect was the major factor slowing the growth [22
]. Improvements of energy efficiency in the industrial sector played the most important role in the evolution of China’s energy use [22
]. Theoretically, the restructuring of the economy should be an effective way of reducing energy consumption. However, as China is still undergoing rapid industrialisation, studies have found that the structure effect only played an ambiguous or negligible role at the national scale [22
]. As a result, changes in China’s industrial energy consumption are mostly determined by the trade-off between the positive scale effect and the negative intensity effect [24
Studies conducted at the provincial scale indicated that total and per capita energy consumption have significant regional differences, with the eastern provinces much higher than their counterparts in central and western regions [28
]. Contrasting studies conducted at the national scale, these provincial-level studies find that some driving factors, such as the intensity effect and the structure effect, exhibit consistently positive and negative effects, both spatially and temporally [28
]. Furthermore, industrial energy consumption in some provinces behaves differently from the national norm. For example, some provinces in Eastern China, such as Beijng, have achieved significant progress in energy conservation by relocating their heavy industries and, therefore, the structure effect in these provinces is very significant [30
]. These findings show that while studies conducted at the national scale are valuable, focusing exclusively at the country level masks regional differences. In fact, regional disparity in industrialisation is very significant in China. The structure of the economy in developed regions, such as Beijing and Shanghai, has already been transformed into the tertiary sector. In 2012, the tertiary sector accounted for 64% and 46% of total energy consumption in Beijing and Shanghai, respectively [31
]. However, the industry sector remains the largest energy consumer in NOIB. Clearly, the deindustrialisation strategy pioneered by Beijing and Shanghai is difficult to be followed elsewhere in China, especially in poorer regions that depend on industrial revitalisation. The question, then, is how to reduce energy consumption in an industrialising NOIB. Answering this question would require a regional-level analysis. In this study, we conducted a regional analysis of NOIB to produce policy recommendations that are sensitive to local contexts.
5. Conclusions and Discussion
This study examined the changes in industrial energy consumption in Northeast China over the 2003–2012 period. We decomposed the industrial energy consumption changes into the activity effect, structure effect, and intensity effects. Our results indicate that the northeast region has almost doubled its industrial energy consumption due to the rapid expansion of industrial activity, and that the cumulative intensity effect is stronger than the structure effect in conserving energy. This finding is similar to studies conducted at the national level [25
]. This similarity suggests that the improvement in energy efficiency has been the main driving force of energy conservation at both the national and regional levels. However, our analysis also shows that the intensity effect is not the only reason for energy conservation in industrial sector of Northeast China. In fact, the structure effect has a stronger impact than the intensity effect on industrial energy consumption from 2005–2011. This finding is different from previous observations at the national level, which found that the structure effect either has a positive [25
] or ambiguous [26
] impact on industrial energy consumption. Therefore, a shift in industrial composition has begun to make a contribution on energy conservation at the regional, but not the national, level. However, the negative impact of the two factors is weakening and not strong enough to counter the positive impact of the activity effect on such consumption.
From a policy perspective, this paper highlights the problem of uncoordinated policy-making at the regional level: the development strategy still depends highly on traditional heavy industries in the northeast, which is in conflict with to the goal of energy conservation. These two conflicting objectives, industrial revitalisation and energy conservation, must be reconciled. As a developing economy, the northeast cannot rely on deindustrialisation to achieve low-carbon development. On the other hand, the economic revival of the northeast should not be achieved at the cost of the fast-growing energy consumption and CO2 emission. The bottom line is that the strategy to revitalise traditional heavy industries has become increasingly ineffective. The overall picture suggests that China’s national economic structure is changing and, consequently, the demand for heavy industries, such as cement and steel, would decrease. Continuing the existing revitalisation strategy would eventually lead to overcapacity and overproduction. Therefore, in addition to improving energy efficiency, it is vital for the northeast to adapt its revitalisation strategy towards the development of new technologically-driven industries to achieve a low-carbon transition in the industry sector.
This study suggests certain policy measures to help achieve these objectives. First, strict control should be imposed on the expansion of energy-intensive industries. Currently, the top six energy-consuming industries in Northeast China consume 87.8% of total industrial energy consumption; however, they only account for 34.4% of the total industrial output value. Therefore, to achieve low energy intensity and high production efficiency, the first step has to start from the energy-intensive industries. This can be achieved through administrative means, such as forced closure and investment restriction, or through economic measures, such as imposing higher electricity tariffs.
Second, foster the development of new technologically driven industries. To achieve a low-carbon industrial transition of Northeast China, more fiscal and regulatory supports from the central government should be provided to foster the development of new technologically-driven industries, such as processing of agricultural products, manufacture of equipment, etc., as these industries consume less energy and generate more output value.
Third, the energy efficiency of existing industries should be improved. This is particularly important in the case of small enterprises thus far neglected by the government in its energy conservation efforts [38
]. In addition to administrative measures and financial support, we recommend providing small enterprises with more support to overcome information barriers, such as a free or subsidized energy audit. In addition, the government could consider imposing a tax on coal consumption to reflect externality costs. Currently, most industries in the northeast use coal and the imposition of this tax would force industries to become more energy efficient and switch to cleaner fuels, such as natural gas and renewable energy.
Fourth, the application of non-fossil energy should be promoted to control the fast growth of CO2
emission. Up to now, the proportion of non-fossil energy in total industrial energy consumption of Jilin, Liaoning, and Heilongjiang is still very low, which is expected to reach 9.8% [39
], 4.5% [40
], and 3.8% [41
], respectively, by 2015 (the national average was 9.8% in 2013 and is required to rise to 15% by 2020 [5
]). Actually, Northeast China has abundant renewable and clean energy, such as wind power, water power, geo-thermal energy, and nuclear power. However, there are many constraints on the effective utilization of the non-fossil energy. For example, Northeast China is a key area of wind farm development. However, because of a weak grid structure and a power structure dominated by coal-fired power plants, a significant amount of electricity is lost to curtailment [42