Decoupling Economic Growth from Energy Consumption: an Analysis of Beijing, China

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1 Decoupling Economic Growth from Energy Consumption: an Analysis of Beijing, China Yanfang Zhou 1, Yanping Bai 2,* 1. Faculty of Humanity and Social Science, Beijing Institute of Petrochemical Technology, Beijing, China 2.College of Management, Capital Normal University, Beijing, China Abstract: Economy has increased rapidly, so has energy consumption in the recent decades in China. To understand and face the relationship between energy consumption and economic growth correctly has an important theoretical and practical significance on the longterm development of the economy and society in the world. Based on Tapio decoupling model, this paper calculated the decoupling rates of economic growth and energy consumption in Beijing from 1990 to 2013, analyzing the corresponding decoupling situation of economic growth and energy consumption. And as a result, the paper concluded that the decoupling state of economic growth and energy consumption was very weak in Beijing. Then the paper analyzed the driving factors of the weak decoupling state and proposed some suggestions on accelerating the decoupling between the economic growth and energy consumption of Beijing. Keywords: Economic Growth, energy consumption, driving factors 1. Introduction Organization for Economic Co-operation and Development (OECD) played an important role of foundation in the development of decoupling index and its model (OECD 2002, WANG Chong-mei 2010, ZHONG Tai-yang et al. 2010, LIU Yi-jun et al. 2011). More theoretical researches have appeared since the concept of decoupling was introduced into the fields of environment and economy. The researches on decoupling have made some progress in China so far(zhong Tai-yang et al. 2010, CHEN Hao et al. 2011, WANG Heming et al. 2011). Most of the researches involved in different levels including national level and regional level, of economic growth and environmental pressure (i.e. energy consumption, carbon emission and so on) in the whole country, Beijing, Jiangsu province, Wuhan, etc (YUAN Kai-qi et al. 2011, GAI Mei et al. 2014, ZHANG Wen-bin et al. 2013, YU Zhong-hua et al. 2014, LIU Wentao et al. 2012). Among them, the researches on decoupling in Beijing mostly focused on the relationship between economic growth and carbon emission, while less on the relationship between economic growth and energy consumption at present. Beijing had rapid economic development, large population and massive energy consumption. The paper studied the decoupling between the economic growth and energy consumption of Beijing to provide some references for recognizing the status quo of the relationship between economy development and energy consumption and its future trend of development in Beijing, and to benefit the achievement of saving energy and reducing its consumption for Beijing. 2.The economic growth and energy consumption of Beijing The development of the society in Beijing has made great achievements since 1990, especially for the economy, the urban landscape and the living standards of citizens. Energy contribution to the economic and social development is remarkable in the major shift. For example, the energy rising at the speed of 4.47% supported 17.38% of economic growth in Beijing in the last years (NBSPRC 2014, BSIN). 2.1 The economic growth of Beijing The gross domestic product (GDP) increased by 7.7% in Beijing in 2013, similar to the previous year. The GDP reached RMB trillion Yuan in 2013 in Beijing, the proportion accounted for 3.4% of the GDP of the whole country. It had an increase of billion yuan over the last year. The GDP per capita in 2013 rose to yuan (US$ 15284) by 8.2% over that in 2012 (NBSPRC 2014, BSIN). 2.2 The energy consumption of Beijing In 2014, the total energy consumption in Beijing reached million tons of standard coal [12, 13]. On the other hand, the energy consumption of per ten thousand yuan GDP dropped from tons of standard coal in 1990 to 0.36 tons of standard coal in 2014 (NBSPRC 2014, BSIN). The energy consumption of per ten thousand yuan GDP decreased year by year. And the coal consumption in whole Beijing dropped below 2000 ten thousand tons for the first time in 2014 (BSIN). Figure 1 indicated that the energy consumption per ten thousand yuan GDP in whole Beijing and the energy consumption per ten thousand yuan GDP of the three industries fell from 2001 to In 2001, the energy consumption per ten thousand yuan GDP was tons of standard coal, but it declined to tons of standard coal in Beijing in 2014, with annual average energy consumption per ten thousand yuan GDP decreasing. Among them, the larger decline of the energy consumption per ten thousand yuan GDP happened in the secondary industry in Beijing during the corresponding period. In 2014, all of the energy consumption per ten thousand yuan GDP of the three industries were less than those in 2001, with tons of standard coal for the primary industry, tons of standard coal for the Journal of Residuals Science & Technology, Vol. 13, No. 7,

2 secondary industry and tons of standard coal for the tertiary industry, irrespectively in And the energy consumption per ten thousand yuan GDP in the tertiary industry is the lowest in Beijing in Apparently, the industries policies of improving the status of the tertiary industry to make it be a pillar industry of economic development, reducing the proportion of primary industry and optimizing the structure of the second industry had come into force. Consequently, the speed of economy development increased fast and the energy was greatly saved in Beijing at that time. 3.Methodology and data source 3.1 Methodology There were two main models in the decoupling theory researches, including OECD decoupling model and Tapio decoupling model. Tapio decoupling model was developed on the basis of the OECD decoupling model. Because Tapio decoupling model introduced the concept of decoupling elasticity which can reflect the relationship between variables dynamically, it can overcome the difficulties in base selection choice of OECD decoupling model. Based on the the decoupling elasticity coefficient, the decoupling status could be classified in detail. Therefore, Tapio decoupling model has become the main methodology to study the relationship between the economic growth and environmental pressure in recent years (Wei Song et al. 2014, Tapio Petri 2005, YU Fa-wen 2009). In this paper Tapio decoupling model was used to analyze the relationship between the energy consumption and the economic development in Beijing during 1990 to (Eq. 1) In equation1, DE is the decoupling elasticity coefficient between energy consumption and economic growth. is the annual change rate of the total energy consumption. is the annual change rate of the GDP. According to different the, the Table 1)., and the DE, the decoupling status of Tapio decoupling model could be classified into three groups and eight subgroups (See Table 1 The categorization of decoupling state Decoupling State TEC GDP Decoupling elasticity coefficient Decoupling Strong decoupling <0 >0 n<0 Weak decoupling >0 >0 0<n<0.8 Recessive decoupling <0 <0 n>1.2 Negative decoupling Strong negative decoupling >0 <0 n<0 Weak negative decoupling <0 <0 0<n<0.8 Expansive negative decoupling >0 >0 n>1.2 Coupling Expansive coupling >0 >0 0.8<n<1.2 Recessive coupling <0 <0 0.8<n<1.2 In Table 1 strong decoupling expressed that energy consumption decreased but economy increased. Weak decoupling showed the rate of depleting energy was slower than the rate of economic growth. Recessive decoupling indicated that energy consumption decreased while economy decreased. And the rate of depleting energy was faster than the rate of economic decline. Weak negative decoupling indicated that while energy consumption decreased, economy decreased too. But the rate of depleting energy was slower than the rate of economic decline. Strong negative decoupling showed that energy consumption increased but economy declined. Expansive negative decoupling showed that the rate of depleting energy was faster than the rate of economic growth. Expansive coupling indicated that energy consumption increased while economy grew. Furthermore, both of the rising speeds were almost the same. Recessive coupling expressed that energy consumption decreased while economy decreased, and both of the declining rate were almost the same. 3.2 Data source Main data about energy consumption, GDP, etc. were from the statistical yearbook of Beijing city in 2014, and others were obtained from the website of Beijing Municipal Bureau of statistics. 4.Results 4.1 The decoupling state of Economic growth and energy consumption in Beijing The paper calculated and got the decoupling state of the economic growth and energy consumption through the model of Tapio decoupling from 2001 to The results were showed in Table 2. Table 2 Decoupling state of economic growth and energy consumption in Beijing in Year DE Decoupling state Weak decoupling Weak decoupling Journal of Residuals Science & Technology, Vol. 13, No. 7,

3 Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling Weak decoupling 4.2 Analysis of decoupling state in Beijing The paper got the following results, analyzing the decoupling state of the economic growth and energy consumption in Beijing from 2001 to During the period of , the decoupling state of the economic growth and energy consumption in Beijing was very stable. All were in the state of weak decoupling, to a large extent, due to some sound economic policies and measures in recent years in Beijing. The GDP in Beijing grew, so did the total energy consumption. But the rising speed of the energy consumption was lower than the rising speed of the economic development. All that showed that there was some certain relationship between the economic growth and energy consumption, and they did not completely decouple in Beijing. The economic growth has had certain dependence on energy consumption. The average value of the decoupling elasticity value was 0.38 in Beijing in Moreover, the decoupling elasticity coefficients were relatively stable during the period without large variation, especially the decoupling elasticity coefficient were only 0.07 in 2007 and The results indicated that although the relationship between the economic growth and the energy consumption were in the state of weak decoupling, it was relatively close to the strong decoupling state. But there was a steady gap alongside. Seen from Figure 2, the GDP growth rate and the energy consumption rate fluctuated quite similarly in Beijing from 2001 to 2014 and the correlation coefficient between the energy consumption rising rate and the economic growth rate was This showed that the GDP growth and the energy consumption in Beijing had high correlation degree. The economic growth, which relied on energy very much, was largely at the expense of energy consumption in Beijing during 2001 to Reasons of the decoupling state of the energy consumption and the economic growth in Beijing 5.1 High proportion of high energy consuming industries and irrational industrial structure In terms of the three industries, the proportion of the secondary industry was too large in Beijing. And within the industry, the proportion of petrochemical industry, energy, equipment manufacturing and non-ferrous metal smelting industry were also too high. Because industrial energy consumption per unit of GDP is much higher than that of the tertiary industry, and the energy consumption per unit output in heavy industry is much higher than that in light industry, high energy consuming appeared during the process of economy development in Beijing. 5.2 Low energy use efficiency and the energy structured needing optimization Although the energy consumption per ten thousand yuan GDP decreased from tons of standard coal in 1990 to 0.36 tons of standard coal in 2014, compared with the world advanced level, there was a big gap in energy efficiency, energy consumption per unit product and so on in Beijing, even in China. This mainly resulted from urbanization process accelerating, increasing demand for cars and energy demand maintaining a steady rise. In addition, it is more difficult to lower the energy consumption per unit product in the context of the slowdown of economic growth. At the same time, in the process of stimulating domestic demand, to some extent iron and steel, cement and other raw materials demand growth made the high energy consuming industries grow. The proportion of renewable and clean industries with low energy consumption is very small. 5.3 Insufficient investment in technical research and development and weak independent innovation capability Journal of Residuals Science & Technology, Vol. 13, No. 7,

4 The development of new energy is an important way to solve the problem of high energy consumption in the traditional economic growth. However, there is lack of enough investment in technical R & D and strong independent innovation ability. Without considering the external environmental costs of the conventional energy, costs of using new energy to produce heat, electricity and others usually are higher than those of using the conventional energy. Consequently, there is no economic competitive advantage and no investment motivation for most industries in Beijing. Although the development of new energy has been paid more and more attention, many enterprises do not recognize the strategic significance of the development of new energy, lack of awareness of technology R & D investment, which directly affects the innovation of new energy sources. 6.Suggestions China is currently in the stage of a large amount of greenhouse gas emissions with fast growth rate, high carbon emissions per unit of GDP and low energy efficiency. To achieve the sustainable development, Beijing can take the following advices on energy, economy and environment. 6.1 Optimize the industrial structure, accelerate the development of low energy consumption industry To solve the decoupling problem of economic growth and energy consumption in Beijing, The government is expected to continually transform economic growth pattern (Yue-Jun Zhang et al. 2015) and the industrial structure must be optimized to accelerate the transition of economic structure. The government is expected to try to transit the economy structure with heavy pollution energy to an intensive economy structure with clean and high technological energy. Beijing should strive to develop the tertiary industry and high-tech industries, especially tourism and modern service industries. 6.2 Strengthen the policy level guidance and establish incentive mechanism As for energy consumption policy, the government should continue to set the restrictive indicators and the industry standards in national economic development plan, implement the leading mechanism of industry, encourage enterprises, institutions and residents to practice energy saving and carbon emission reduction. Secondly, the government should encourage new energy development and utilization by means of fiscal and financial tools to change the situation of economic growth over-depending on the energy consumption. Large energy consumption of the industry and departments should promptly improve production technology, replacement of production equipment and improve energy efficiency. The government can also establish incentive mechanism to reduce CO2 emission, and even to create some relevant policies to accelerate the development of those low-carbon industries (Yue-Jun Zhang et al. 2015). 6.3 Increase capital investment in technology researches and developing, improve the ability of independent innovation of enterprises Increase capital investment is the premise and guarantee of technology research and development. The government should establish special funds for scientific research to support the development of high-tech industries and new energy development. The enterprises should fully recognize the strategic significance and the potential of the new energy in the future, and actively take funds for scientific research. Compared with the developed countries in the world, the new energy industry in our country starts late, and has weak foundation. Therefore, Beijing should actively seek international cooperation to introduce advanced technology so as to enhance independent innovative capability and reduce the cost of new energy development. 6.4 Adopt advanced and innovative energy technologies in energy production to save energy(wang Fengyun 2008) Beijing should use advanced energy technologies, and continuously improve the efficiency of energy production and utilization and the comprehensive efficiency of energy system to save energy in many ways and make the energy efficiency of the energy industry reach the international advanced level as soon as possible. The government can also encourage energy conservation with the comprehensive use of legal, economic and technical means, etc. Besides, the government can study the energy-saving potential from the aspects of mining, processing, transportation, use and consumption and others to develop energy-saving industry and promote the construction of energysaving market. 6.5 Accelerate the development of renewable energy and new energy, China is facing with serious situation of rapid economic development, severe shortage of energy supply and energy industry to deal with climate change and energy saving and carbon emission reduction. Beijing, as the capital of China, is no exception. It is wise and important for Beijing to develop renewable energy and new energy source in the future, ensuring energy security and helping reduce greenhouse gas emission (Xu Hongxing 2010). In order to promote economic development, challenge the global climate change, and reduce greenhouse gas emissions and so on, Beijing should accelerate the development of renewable energy and new energy, in particular, to strength the development of hydropower and wind power. At the same time, Beijing can effectively reduce the emissions of CO2 from fossil fuels burning, relying on the opportunity of the country s strategic focus on nuclear power development and the efforts to improve the national power structure. Beijing should continue to study and develop the innovative technologies of renewable energy production and new energy production, and try to increase the competitiveness of renewable energy. Meanwhile, the government can largely increase the share of renewable energy, improve energy efficiency and save energy. In addition, the government can give more financial and technical supports to improve the abilities of renewable energy use. 6.6 Implement educational reforms to improve the energy-saving awareness of residents in Beijing An Educational reform in energy-saving and environmental protection is also very important for Beijing to the development of economy sustainably, which will be able to enhance the awareness of energy conservation and the awareness of energy efficiency of the residents in Beijing. The government can call for efforts to speed up clean energy development to promote energy saving and emission cut, and help people fully realize the crisis of energy shortage in our country, understand the true meaning of energy saving and environmental protection to the country and individual, and truly possess the awareness of energy conservation and environmental protection. For instance, the government can try to teach the residents the knowledge of environmental protection, energy conservation, low-carbon lifestyle and so on to encourage them to reduce energy consumption and save energy with various efforts. Journal of Residuals Science & Technology, Vol. 13, No. 7,

5 7.Summary In essence, consuming a large amount of energy is not the necessary condition for economic growth of Beijing. Beijing can relieve the contradiction between economic development and energy consumption with the suggestion above to actively realize the transition from extensive economic growth mode to intensive economic growth mode and to achieve the complete decoupling of the economic development and the energy consumption. At present, the energy consumption per ten thousand GDP decreased significantly at present. Among those, the tertiary industry consumed the most energy, the secondary industry consumed higher energy, and the primary industry consumed energy stably. The policies of energy saving and emission reduction have been effectively implemented in the industrial structure adjustment. The economic growth and energy consumption will decouple soon in Beijing. Acknowledgements We gratefully acknowledge the financial support from the two science research projects of Beijing Municipal Commission of Education (No.SZ and No.SM ), the project from Beijing Planning Office of Philosophy and Social Science (No. 13JDJGA033) and the teaching reform project of Learning Community in Beijing Institute of Petrochemical Technology. We are very grateful for the reviewer s hard work. References [1] BSIN (Beijing Statistical Information Net). [2] CHEN Hao, ZENG Juan. Study on decoupling between economic development and energy consumption of Wuhan. Journal of Huazhong Agricultural University (Social Sciences Edition),2011, (6), pp [3] GAI Mei, CAO Guiyan, TIAN Chengshi, etc. Decoupling analysis of energy carbon emissions and regional economic growth in the Liaoning Coastal Economic Belt. Resources Science, 2014,36(6),pp [4] LIU Yi-jun, WANG Li, NIU Wen-yuan. Decoupling research between economic development and energy consumption of China' s cities. CHINA POPULATION, RESOURCES AND ENVIRONMENT, 2011,21(1),pp [5] LIU Wentao, GE Xinquan. Have economic growth and energy consumption of Beijing been decoupled? Urban Studies,2012,19, No. 10 (2012), pp [6] NBSPRC (National Bureau of Statistics of the People s Republic of China). [7] OECD. Indicators to measure decoupling of environmental pressure from economic growth [R].Paris: OECD, [8] Tapio Petri. Towards a theory of decoupling: Degrees of decoupling in the EU and the ease of road traffic in Finland be-tween 1970 and Journal of Transport Policy, 2005(12), pp [9] WANG Chong-mei. Decoupling analysis of China economic growth and energy consumption. CHINA POPULATION, RESOURCES AND ENVIRONMENT, 2010,20, (3),pp [10] Wang Fengyun. Empirical research of the relationship between energy supply & demand and economic growth in China. Journal of Industrial Technological Economics, 2008(10),pp.77-80,85. [11] WANG Heming, YUE Qiang, LU Zhongwu. Decoupling analysis of China s resource Consumption and economic growth over the Period Resources Science, 2011,33(9)), pp [12] Wei Song, Ming liang Liu. Assessment of decoupling between rural settlement area and rural population in China. Land Use Policy,2014, 39, pp [13] Xu Hongxing. Energy utilization in China and countermeasures. SINO-GLOBAL ENERGY,2010(15),pp [14] YU Fa-wen. Empirical research on the decoupling relationship between economic development and the resource environment. Inner Mongolia Journal of Finance and Economics, 2009(3), pp [15] YU Zhong-hua, LI Wen-qing, XIE Fang-jian, etc. Decoupling research between economic growth and atmospheric environmental pollution of Nanjing. Science Technology and Engineering, 2014,14 (18), pp [16] YUAN Kai-qi, DONG Jie. Carbon emissions in Hubei: calculation, structure and decoupling analysis. RESEARCH OF AGRICULTURAL MODERNIZATION, 2011,35(4), pp [17] Yue-Jun Zhang, Ya-Bin Da. The decomposition of energy-related carbon emission and its decoupling with economic growth in China. Renewable and Sustainable Energy Reviews,2015, 41, pp [18] ZHANG Wen-bin, CHEN Ying, ZHANG Ren-zhi, etc. Study on the relationship between cultivated land occupation and economic growth based on the decoupling method taking Kangle county of Gansu province as an example. JOURNAL OF NATURAL R ESOURCES,2013,28 (4), pp [19] ZHONG Tai-yang, HUANG Xian-jin, HAN Li, etc. Review on the research of decoupling analysis in the Field of Environments and Resource. JOURNALOFNATURALRESOURCES, 2010,125, (1), pp Journal of Residuals Science & Technology, Vol. 13, No. 7,