Target versus Price: Improving Energy Efficiency of Industrial Enterprises in China

Open Access
Zhang, Kuangyuan
Graduate Program:
Energy and Mineral Engineering
Master of Science
Document Type:
Master Thesis
Date of Defense:
April 02, 2012
Committee Members:
  • Zhen Lei, Thesis Advisor
  • Antonio Nieto, Thesis Advisor
  • Andrew Nathan Kleit, Thesis Advisor
  • Energy Saving Policy
  • Government Target
  • Energy Price
The strong performance of China’s economy has been making headlines all over the world, so as to its escalating demand for energy. In 2005, Chinese government announced Energy Saving and Emission Reduction policy with a target of reducing energy consumption and pollution emission per unit of GDP by 20% and 10%, respectively by 2010. The soaring electricity price assigned by Chinese government to enterprises is also promoting industrial enterprises to improve energy efficiency. By controlling time fixed effect, enterprise fixed effect and the prices of enterprises’ two most important raw materials, an econometric model based on panel data is established to identify incentive effects of government target and electricity price on China enterprises’ progress of energy efficiency, as well as channels of progress such as internal Research and Development (R&D), retrofitting aged machine and purchasing domestic and foreign equipment. Moreover, differentiated response respect to government target and price increase is considered by classifying enterprises by characteristics such as ownership, authority status, revenue size, technology level, economic contidions, etc. The result shows that both government target and price increase are significantly boosting industrial energy efficiency improvement. Target significantly impacts energy efficiency through all channels. Whereas electricity price increase only significantly promote enterprises to purchase foreign machine. Enterprises with dispararte authority status, difficulty of energy saving, penalties if can not achieve the target and economic conditions are enacting significantly different responses to government target and price increase. Based on the research, suggestions are offered for energy saving research, policy-making and practice.