Why does energy intensity fluctuate in China?

Energy intensity reflects energy usage efficiency of an economy, in the process of production and consuming of economic output. Why does energy intensity fluctuate in China? In this paper, we explores the distortion of different energy prices, the change of energy structure, technological and final demand structure and their impact on energy intensity in China, based on the path analysis method and input-output structure decomposition model, respectively. And three results have been showed in this paper: first, proved that optimize the relative prices of different types of energy is the most important pricing mechanism when cut down the energy intensity; second, showed that the proportion of oil consumption is the limiting factor that has led to energy intensity change; third, built an input-output structure decomposition analysis model and analyzed technological changes, final demand structure changes, and their direct and indirect impact on energy intensity based on energy input-occupancy-output tables of 30 industry sectors of China in 1992, 1997, 2002 and 2004, which suggest that the fluctuation of energy intensity is mainly due to technology advances and the corresponding change in industrial structure. Crown Copyright © 2009.