How does information and communication technology affect China's energy intensity? A three-tier structural decomposition analysis

The continuous diffusion of information and communication technology (ICT) has exerted growing influences on the production process and energy use. This paper analyzes the major drivers behind changes in China's energy intensity with emphasis on ICT and production structure using a three-tier structural decomposition analysis (SDA) approach. This approach could thoroughly quantify the various effects of ICT on energy intensity and investigate the mechanisms of ICT input change through which it affects sectoral energy consumption. The main results indicate that: (a) production structure exerted a rising negative effect on China's energy intensity change from 2002 to 2012; (b) ICT contributed to a 4.54% increment in energy intensity, yet ICT input substitution was conducive to reduce energy use in production; (c) the ICT effects were more significant in the service sector and technology-intensive sectors. The study suggests that the Chinese government should formulate measures for adjusting production structure, promoting sustainable development of ICT and harmonizing inter-sectoral ICT input level.