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Forecasting the Demand for Energy in China

In this paper we use a cointegration and vector error-correction model to analyze the energy consumption behavior of China. In formulating a model suitable to China, it is found that not only conventional variables such as energy price and income are important, but the share of heavy industry output in the, national income is also a significant factor. With the help of a vector errorcorrection model, we predict that China will need approximately 1.42 billion tons of standard coal equivalent by the end of this century, representing a 44 percent increase compared with 1990.

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Energy Specializations: Energy Access – Sustainable Development and Distributed Energy; Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy Modeling – Forecasting and Market Analysis; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, C53: Forecasting Models; Simulation Methods

Keywords: Energy demand, Forecasting, China, VAR model

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No1-2

Published in Volume17, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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