Elasticity of Energy Demand and Challenges for China＇s Energy Industry

I. Introduction Since late 2002, China’s energy demand and resources have become one of the most prominent issues in international discussions of energy. In our earlier studies of China’s energy demand as relates to transportation and urbanization (Gates and Yin, 2002; Yin and Gates, 2002), we took more of a long-term view and raised the possibility that even if China’s economy continued to grow rather slowly, which was the prevailing perception at the time, there would still be strong d…

Elasticity of Energy Demand and Challenges for China's Energy Industry

The rapid growth of energy demand, the lagging growth of energy production and rising pollution problems have raised concerns in several policy areas, including the availability and cost of energy supply and the possibility of further adverse impacts on the environment. This paper begins with an overview of recent developments in energy demand and supply in China. Using a traditional demand elasticity approach, it analyzes the elasticity of each of four major energy end uses and the potential for adjustments in their relationships. The paper concludes with suggestions for public policy to meet the challenge of growing energy demand and implications for the private sector, including both private and foreign investments .