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The Effect of Urban Household Lifestyle Change on Energy Demand in China

 

 
Osasohan Agbonlahor
Graduate Assistant, Dept. of Economics
University of Nevada, Reno
sohan.agbonlahor@yahoo.co.uk

 

China is the second largest energy consuming country behind the United States. The household lifestyle has undergone significant change due to the rapid economic growth it has experienced in the last decade. This change has led to an increase in incomes, demand for goods and services as well as energy consumption. The purpose of this study is to examine the impact of change in urban household lifestyle on energy consumption and the related carbon emissions. The study employs the use of the Consumer Lifestyle Approach (CLA) in measuring the direct and indirect effects of household lifestyle changes on energy demand. The results show that energy consumption and annual carbon emission have increased throughout the study period, while energy intensity has shown a declining trend. 

The population of China stands at 1.338 billion people. The Chinese economy after the open policy of 1978 has experienced tremendous growth. The average GDP growth rate of China during the last decade was about 10.03%. The increase in growth of Urban China accounts for a greater portion of the overall growth, which has led to significant increase in demand for energy. To support such rapid economic growth, China's energy consumption has quadrupled from 603 million tons of coal equivalent (Mtce) in 1980 to over 3,000 Mtce in 2010 and it is still on the rise (National Bureau of Statistics of China (NBS), 2010). In 2010, China consumed 17.4% of the world’s energy compared to only 7.9% in 1975, making it the world's largest energy consumer and top greenhouse gas emitter. According to the IEA (2010), China’s share will surge to 22% through 2035 and will account for over 30 per cent of the projected growth in global energy demand. 

The demand for energy is a derived demand. The change in lifestyle of the Urban Chinese household over the years has led to an increase in the demand of energy in China. This demand is as a result of changes in the demand for food, clothing and household appliances. It could also be as a result of direct use of energy in cooking, heating and cooling.

The available up-to-date data has been sourced from the Energy Balances and Statistics of the World Bank and China Statistical Year Book. The study makes use of the Consumer Lifestyle Approach (CLA) in studying the growth trend in energy demand in China’s urban areas for the period 2009- 2012 as a result of lifestyle changes. It identifies two main drivers namely, lifestyle and income. Furthermore, it relates the energy demand growth rate with CO2 emission and offers suggestions to mitigate the associated problem. The impact of the lifestyle changes on energy demand and CO2 emission is divided into indirect and direct impact.

 

Methodology

The indirect impact is estimated using the specific or unit consumption based forecasting approach. A number of indicators were used to measure the indirect impact such as food, clothing and household facilities. The number of urban households is estimated by dividing the total number of population living in urban areas by the average household size in urban areas which is 3 people (based on the one child policy).  The total energy consumption is derived by the multiplication of per capita energy consumption of household by the urban household population.

The energy consumed by food, clothing and household facilities is estimated from the proportion of expenditures on each indicator from the total urban expenditure. This was derived by multiplying the share of expenditure from the total income for each indicator by the total energy consumption of the urban household. 

  

 

 

 

                                                

                     

 

 

The indicator of the direct urban household energy include heating, cooking, cooling etc. The consumption of fuels is used to estimate the energy demand for the period (2009-2012). The change in demand for energy over the years depicts the lifestyle changes of urban residence. Urban residence energy consumption is derived by multiplying the proportion of urban residence population of the total residence population by the total residential fuel type energy consumption

 

 

The associated CO2 emission is derived by multiplying the energy consumed in fossil fuel by the fuel coefficient.

 

 

On the other hand, the urban energy consumed and the associated CO2 emission is estimated for the period. The average growth rate is estimated and used to forecast the energy consumption and associated CO2 emission for 2030.

 

Empirical Results and Discussion

Based on the methodology discussed above, this paper assesses the direct and indirect impact of urban household’s lifestyle on energy consumption, energy intensity as well as the associated carbon emission (and intensity) during the period 2009-2012.

Indirect energy consumption of urban household

From figure 1 below, it is clear that the level of energy consumption has increased over the period for all household indicators. The share of food in total energy consumption is highest throughout the period. The share of clothing is relatively constant over the period while household facilities and services account for the least share of household energy consumption. The energy consumption of food is rapidly growing; indicating that energy requirement of urban families will become greater. This suggests that changing lifestyles is having proportional changes on energy consumption.

 

 

Indirect impact of urban household lifestyle on energy intensity

From figure 2, the energy intensity of all home indicators is declining. The most energy intensive urban household item over the study period is food. In this period, its indirect energy use was 69 per cent of total energy consumption; the next was clothing whose energy use was 20 per cent while household facilities and services had indirect energy use of 11 per cent. The ratio of energy consumption to output of economic activities of food was decreasing over the years from 1.76 in 2009 to 1.02 in 2012.

 

 

 

This decline is as a result of rising annual income over the period. The energy intensity of clothing is also declining but at a slower rate of 0.5 Mkg/Yuan in 2009 to 0.29 Mkg/Yuan in 2012. The energy intensity of household facilities and services presented a declining trend. The intensity of household indicators is declining because annual income of urban families is growing at a faster rate than food, clothing, facilities and service expenditures. This shows the increasing efficiency of energy use across china’s urban households as less energy is consumed per annual income over the years.

Indirect impact of urban household lifestyle on carbon emission

During the period, the indirect carbon emission of food, clothing, household facilities and services was 62.9, 16.5 and 12.5 per cent respectively. The carbon emission of food showed an upward trend during the years. The share of food carbon emission is growing over the years as food demand increases. This is because food processing is highly energy intensive (requiring Liquefied Petroleum Gas and/or kerosene) and therefore the related carbon emission is high. The share of clothing is relatively constant. It actually declines between 2009 and 2010 and then increases marginally till 2012. Carbon emission of household facilities and services is growing very slowly. This suggests that future carbon emissions will be higher as energy demand for household purposes grows across the urban areas.

 

 

Indirect impact of urban household lifestyle on carbon emission intensity

The carbon emission of household indicators is declining across the years. The ratio of carbon emission to annual income also shows a declining trend. This shows that efficiency of carbon intensity is increasing amongst urban households.  The carbon intensity of food declined from 3.4 per cent in 2009 to 2.1 per cent in 2012. The intensity of food decreased from 1.1 per cent in 2009 to 0.5 per cent in 2012. Household facilities and services had declining intensities of 0.6 per cent in 2009 to 0.4 per cent in 2010 and remains constant till 2012.

 

 

Direct energy use of urban household

From figure 5, it is evident that the share of coal in household energy use presented an upward trend and accounted for the greatest share in the fuel type analysis during the period 2009-2012. The share of petroleum was highest in 2012. The share of diesel, electricity and natural gas is rising indicating a transition in home energy use of urban households. The share of kerosene is the least and gradually declines over the period. The total household energy consumption grew from 47.9 million Kwh in 2009 to 64.9 million Kwh in 2012.

 

Impact of urban lifestyles on energy use and related carbon emission

Total annual carbon emission caused by household energy consumption, grew from 15.3 million in 2009 to 21.8 million in 2012 (30% growth). Of these, coal accounted for the largest share, closely followed by petroleum. Focusing on 2012, the indirect impact of lifestyle on energy use and the related carbon emission was higher than the direct impact. The indirect energy use was 2.94 times that of direct energy use and indirect carbon emission was 2.11 times that of direct carbon emission caused by urban household lifestyles.

 

The results of the above analysis quantify conclusively that urban household lifestyle does have significant impact on energy consumption and the associated carbon emission. That is, energy demand and use as well as related carbon emissions are all directly and indirectly impacted by changing lifestyles in the country.

Trend Analysis

 

 

 

 

The trend analysis on total household energy consumption (figure 7) shows that the Chinese economy is going to experience a tremendous growth in energy consumption from 46 million Kwh in 2009 to 282 million Kwh in 2030 which represents over 500% growth in energy demand over the next two decades. A similar pattern is observed for the forecast of total carbon emission. The trend shows that this would grow from 19.7 million Kwh in 2009 to 75 million kWh in 2030, indicating a growth of more than 300%. The forecast shows that growth in carbon emission will be less than the growth in energy consumption.

 

Conclusion and Policy Recommendations

This research has used the CLA, energy intensities, unit consumption approach and growth- rate based approach to investigate and forecast the energy consumption and associated co2 emissions for the urban household residents and the following results were obtained:

  • Energy consumption and annual Carbon emission for both direct and indirect effect has increased throughout the observed period under study
  • Energy intensity has shown a declining trend
  • Forecast has shown that energy demand and associated C02 emission would increase in 2030.

From the above analysis, the increase in both the indirect and direct effects and associated co2 emissions calls for government implementation policies.

Policy recommendations and mitigation measures:

  • The Chinese Government should encourage energy conserving appliances for household through the use of tax and subsidy policies.
  • Rigorous efficiency standards for building should be put in place and strictly monitored.
  • An energy orientation and sensitization campaign has to be carried-out as an attempt to change consumer behavior towards energy saving
  • The Chinese Government could impose high prices for energy consumption above specific amount of energy (price ceiling).
  • Encourage research for new and better energy saving technologies for household appliances.

 


References

Bhattacharyya, S. C. (2011). Energy Economics: Concepts, Issues, Markets and Governance. London: Spring.

Bin, S., & Dowlatabadi, H. (2005). Consumer Lifestyle Approach to US energy use and the related CO2 emissions. Energy Policy, 197-208.

China Statistical Year Book 2012. (2012). China Statistical Year Book Database. Retrieved January 14, 2014, from National Bureau of Statistics of China: http://www.stats.gov.cn/tjsj/ndsj/2012/indexeh.htm

US Energy Information Administration. (2012). China Energy Data, Statistics and Analysis. Retrieved April 14, 2014, from EIA Independent Statistics and Analysis: http://www.eia.gov/countries/country-data.cfm?fips=CH

World Bank. (2013). CO2 emissions (metric tons per capita). Retrieved January 14, 2014, from World Bank Indicators: http://data.worldbank.org/indicator/EN.ATM.CO2E.PC

 

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