Evaluating energy conservation in China's heating industry

Energy conservation is a major strategy for China to shift to a low-carbon economy and achieve sustainable development. The heating industry uses coal as its main fuel source in China. Energy consumption of China's heating industry grew at an average annual growth rate of 7.75% over 1980-2011. We use the co-integration method to explore the long-run relationship between energy consumption of the heating industry and the factors including GDP, urban population density, central heating supply areas and fuel price. The results indicate that 1% GDP growth yields 2.24% increase in energy consumption of the heating industry. 1% urban population density growth and 1% central heating areas growth result in 0.56% and 0.36% decline in energy consumption of the heating industry, respectively. Under the BAU scenario, energy consumption of the heating industry will be 157.11 Mtce in 2020. Energy conservation potential is estimated to be 22.16 Mtce under the moderate scenario and 43.6 Mtce under the advanced scenario. Moreover, this paper holds the view that the central heating system can be considered as an effective heating method for cities with dense population, both in the south and north. At last, policy recommendations for energy conservation in the heating industry are provided.