Understanding the rapid growth of China's energy consumption: A comprehensive decomposition framework

• This paper introduces a comprehensive decomposition framework.
• Economic growth contributed most to the increasing energy consumption.
• Labor-energy substitution effect is an important driver to energy consumption growth.

This paper uses a comprehensive decomposition framework, which combines production-theoretical decomposition analysis and index decomposition analysis, to explain the rapid growth of China's energy consumption from 2003 to 2010. The proposed approach provides information about the influence of production technology as well as the effects of inputs substitution. The main findings are as follows. First, Economic expansion was the major driver of China's energy consumption growth which increased energy consumption by 236%. Second, industrial structure change, labor-energy substitution, and technical efficiency change also play significant roles in the increasing energy consumption. Third, technological progress and capital-energy substitution reduced China's energy consumption by 22.4% and 15.3%, respectively.