(assets, plant and equipment that help with production), will determine the future level of China’s
steel consumption, and therefore its level of
industrial energy demand. In addition, China has
experienced uneven development between its
urban and rural areas. This imbalance is itself a
critical determinant for energy service demand in
buildings, especially at China’s current income
levels, and should be understood by policymakers.
In the buildings sector, smaller housing and
increasing urbanisation will drive the transition
to higher-quality energy carriers. China’s high
urban population density and relatively small
housing floor areas will drive the transition to
cleaner and more flexible fuels in buildings. As
more and more rural areas are urbanised and
energy access channels are expanded, the
demand for high-quality fuels rather than highquantity fuels may surge. Policymakers should
ensure that investments in energy carrier supply
networks match future consumer demand rather
than current income levels, or their investments
may restrict consumers’ energy choices or result
in energy waste.
1.1 Energy Services
In this special report, energy service is defined as
the final output used by consumers, such as
lighting, steel products or travel mileage. By
analysing the demand modes of these energy
services instead of energy consumption itself, the
changes in potential demand modes and efficiency can be separated.
Energy service demand may vary with income
and structural factors. Some structural factors
may be affected by policies, for example, capital
investment and urbanisation; other structural
factors, such as climate and culture, are the fixed
endowments of a country. In general, energy
service demand grows as consumer incomes
increase, but this relationship is not necessarily
stable and may even be reversed.
If structural factors in energy service demand
are not considered, the predictions for energy
demand
may
be
inaccurate.
Without
understanding the changes in service demand
modes and the drivers behind such changes, the
forecasts and the policies based on them may
rapidly lose their relevance.
Using historical data of international service
demand, this study identifies common development trends, classifies them into high and low
demand pathways, and identifies their potential
drivers. The aim is to: (i) provide insights into
how energy service demand changes as incomes
increase; (ii) identify the range of demand in
international experience; and (iii) determine how
policies can impact future demand.
The methodology of this study includes the
following steps:
(1) collect global panel data (multidimensional
measurements over time) on energy service
demand, GDP and structural factors;
(2) plot the mean line into the third-degree line
of best fit through all data points (across all
countries and periods);
(3) split all data points into $5,000 GDP per
capita tranches ($0–5,000, $5,000–10,000,
etc.);
(4) identify the high and low service demand
pathways as the lines of best fit through the
top and bottom quartiles of service demand
across each $5,000 GDP per capita tranche;
(5) highlight China’s current values (by province
or city, if applicable) and third-party forecasts of China’s energy service demand in
2030;
(6) identify the explanatory drivers of the variations in service demand; and
(7) plot the lines of best fit through the data
points that make up the top and bottom
quartiles of each explanatory driver in each
$5,000 GDP per capita tranche.
As indicated by the data analysis in international experience, energy demand comes mainly
from four sectors. This study analyses the key
service in each sector as a proxy indicator of the
sector as a whole.
Transport: 28% of global final energy demand
—excluding chemical feedstock.
Special Report 2: Research on China’s Energy Demand Revolution
217
steel consumption, and therefore its level of
industrial energy demand. In addition, China has
experienced uneven development between its
urban and rural areas. This imbalance is itself a
critical determinant for energy service demand in
buildings, especially at China’s current income
levels, and should be understood by policymakers.
In the buildings sector, smaller housing and
increasing urbanisation will drive the transition
to higher-quality energy carriers. China’s high
urban population density and relatively small
housing floor areas will drive the transition to
cleaner and more flexible fuels in buildings. As
more and more rural areas are urbanised and
energy access channels are expanded, the
demand for high-quality fuels rather than highquantity fuels may surge. Policymakers should
ensure that investments in energy carrier supply
networks match future consumer demand rather
than current income levels, or their investments
may restrict consumers’ energy choices or result
in energy waste.
1.1 Energy Services
In this special report, energy service is defined as
the final output used by consumers, such as
lighting, steel products or travel mileage. By
analysing the demand modes of these energy
services instead of energy consumption itself, the
changes in potential demand modes and efficiency can be separated.
Energy service demand may vary with income
and structural factors. Some structural factors
may be affected by policies, for example, capital
investment and urbanisation; other structural
factors, such as climate and culture, are the fixed
endowments of a country. In general, energy
service demand grows as consumer incomes
increase, but this relationship is not necessarily
stable and may even be reversed.
If structural factors in energy service demand
are not considered, the predictions for energy
demand
may
be
inaccurate.
Without
understanding the changes in service demand
modes and the drivers behind such changes, the
forecasts and the policies based on them may
rapidly lose their relevance.
Using historical data of international service
demand, this study identifies common development trends, classifies them into high and low
demand pathways, and identifies their potential
drivers. The aim is to: (i) provide insights into
how energy service demand changes as incomes
increase; (ii) identify the range of demand in
international experience; and (iii) determine how
policies can impact future demand.
The methodology of this study includes the
following steps:
(1) collect global panel data (multidimensional
measurements over time) on energy service
demand, GDP and structural factors;
(2) plot the mean line into the third-degree line
of best fit through all data points (across all
countries and periods);
(3) split all data points into $5,000 GDP per
capita tranches ($0–5,000, $5,000–10,000,
etc.);
(4) identify the high and low service demand
pathways as the lines of best fit through the
top and bottom quartiles of service demand
across each $5,000 GDP per capita tranche;
(5) highlight China’s current values (by province
or city, if applicable) and third-party forecasts of China’s energy service demand in
2030;
(6) identify the explanatory drivers of the variations in service demand; and
(7) plot the lines of best fit through the data
points that make up the top and bottom
quartiles of each explanatory driver in each
$5,000 GDP per capita tranche.
As indicated by the data analysis in international experience, energy demand comes mainly
from four sectors. This study analyses the key
service in each sector as a proxy indicator of the
sector as a whole.
Transport: 28% of global final energy demand
—excluding chemical feedstock.
Special Report 2: Research on China’s Energy Demand Revolution
217