Substitution of Energy and Capital an Its Uncertainty for China

Transcription

1 Substitution of Energy and Capital an Its Uncertainty for China Zhaoning ZHENG Research Center of Contemporary Management Global Climate Change Institute School of Public policy and management Tsinghua university, Beijing , China 1

2 Background t α1 β1 γ µ 5θ 5 1 = (1 + ρ ) ( ) t φ 5 ( 1 ) ( ) 5 φ Y (1 ) φ ) 5 5 = + ρ5 A5 a5 b5 K + b5 E + (1 a5 Y A L K E output output L θ 5 h5 θ 5 labor capital energy labor capital energy 2

3 Background Y A L K E = ( ) ( α1 β1 γ1 ) 1 1 output output 5 µθ 5 5 θ5 5 5 φ5 5 Y = A a b K + (1 b ) E + (1 a ) L φ φ θ h labor capital energy labor capital energy 3

4 4 Version 1 and 2 output labor capital energy ) ( ) 1 ( γ β α ρ E K L A Y t + = ) ( γ β α E K L A Y = ] ) (1 [ ) 1 ( θ θ θ θ ρ h t E b a b K a L A Y = ] ) (1 [ θ θ θ θ h E b a K b L a A Y + + =

5 Y 5 = Version 3, 6 and 9 φ φ5 ( b K + (1 b ) E ) µ θ t ( 1+ ρ5) A5 a φ ) 5 + (1 a L θ 5 h5 θ 5 Y output 11 = [ ( ) ] h11 β11 γ θ θ11 θ11 a K E + (1 a ) L t ( 1+ ρ11) A labor capital energy Y 17 t α θ17 = ( 1+ ρ17 ) A17 L [ b17k + (1 b17 ) E h ] β θ θ17 GREEN, HERMES, MS-MRT DEMETER, EPPA 17 5

6 Version 4, 7 and 10 Y 7 = φ φ7 ( b K + (1 b ) L ) µ θ t ( 1+ ρ7 ) A7 a φ ) 7 + (1 a E θ 7 h7 θ 7 output Y 13 = [ ( ) ] h13 α13 β θ θ13 θ13 b L K + (1 b ) E t ( 1+ ρ13) A energy capital Y 19 t γ θ19 = ( 1+ ρ19 ) A19 E [ b19k + (1 b19 ) L h ] β θ θ19 GLOBAL2100, labor MARKAL-MACRO 19 6

7 Version 5,8 and 11 Y 9 µθ ( ) t φ φ 9 = ( 1+ ρ9) A9 a9 b9 E + (1 b9 ) L φ ) 9 + (1 a K θ 9 h9 θ 9 output Y 15 = [ ( ) ] h15 α15 γ θ θ15 θ15 b L E + (1 b ) K t ( 1+ ρ15) A Y 21 t β θ 21 = ( 1+ ρ 21) A21 K [ b21l + (1 b21) E h ] α θ θ21 21 capital energy labor 7

8 What I found neutral technology progress rate lies between 0.03 and 0.05 for all production functions For C-D C D function, labor input can be omitted in the models without TP, and is equal to 0 in the model with TP. For CES production function, the distribution parameter of labor input, is also very small and can be omitted in the models without TP, and is equal to 0 in the models with TP no production function whose entire estimated parameters passed t-ratio t test According to regression results, the labor input can be excluded from functions 8

9 Why labor no impact Surplus labor : apparent or potential 1. the high rate of employment in China is to great extent for the sake of keeping social stability trading off economic efficiency 2. potential rate of unemployment in China is about 18%, based on some research 3. more than 200 million surplus rural labor cannot be transferred out to other industries 9

10 Point of view More often, to china, population is a kind of burden, not resource, regarding to poor education and training on technology skills whose fault? Energy supply and investment supply are constrained 10

11 literatures T.-Y. Zhou, The trend and way out for China s employment, re-employment employment and labor transfer, Research on Finance and Economic Issues, vol. 11, pp.3-12, Nov.,1999. X.-L. Wu, Y.-J. Jing, Causes and countermeasures for much excess labor supply in China, Population J., vol. 10, pp.36-38, 38, Apr

12 AK model characteristic for China s economical growth Y. Su, X.-X. Xu, Specification of China s s economic growth model: , 1998, Economic Research J., no.11, pp.3-11, Nov Y = K (5.559) capital / GDP =about (60.951) 12

13 Annex fig 1 GDP year Annex fig 3. population year annex fig 4. energy year yuan 104 tce 104 persons capital year yuan

14 capital-gdp relation energy-gdp relation GDP capital GDP energy labor-gdp relation 14 GDP(108 yuan) labor(104 person) thousand yuan RMB Annex fig.2capital of per capital year 14

15 GDP-capital-energy relation GDP ENERGY CAPITAL 15

16 16 Recommended version 1: CES θ θ θ ρ h t r E a A ak Y + + = ] ) (1 [ ) (1 1 θ θ θ h r E a A ak Y + = ] ) (1 [ 2

17 Recommended version 1: C-D Y = (1 + ρ) 3 r t AK β E γ Y4r = AK β E γ 17

18 Y 1r = (1 + ρ ) t A[ ak θ + (1 a) E θ ] h θ Parameters name Parameter value Standard error t-ratio A 1 a h

19 Y 2r = A[ ak θ + (1 a) E θ ] h θ Parameters name Parameter value Standar d error t-ratio A a h

20 Y = (1 + ρ) 3 r t AK β E γ Parameters name Parameter value Standard error t-ratio A

21 Y4r = AK β E γ Parameters name Parameter value Standard error t-ratio A

22 Substitution elasticity and Returns to scale Model Substitution elasticity Returns to scale Model 1 (K/E) <1 Model 2 (K/E) >1 Model 3 1 (K/E) <1 Model 4 1(K/E) >1 22

23 CES C-D 23

24 Summary Only capital and energy are used as inputs. Great uncertainty exists regarding the substitution elasticity between energy and capital Technology progress has great influence on the parameters of production functions output elasticity of capital input is much higher than that of energy input 24

25 Discussion Surplus labor issue. Sectoral production functions may be more appropriate than national production function for China control energy consumption growth while keeping high economic growth rate, R&D and technology promotion. 25

26 Scenario Set Business as Usual GDP year ENERGY (billion yuan, 2000price) Energy consumption (Mtce) 26

27 Scenario Set energy conservation GDP year ENERGY (billion yuan, 2000price) Energy consumption (Mtce) 27

28 Scenario Set energy elasticity BAU EC 28

29 Energy consumption for different scenarios energy consumption MTCE year BAU EC ER5 ER10 ER15 29

30 Uncertainty of capital stock demand Between C-D and CES under BAU -----With technological progress Absolute diff ( billion, 2000 price) Absolute diff ( billion, 2000 price) 30

31 Uncertainty of capital stock demand Between C-D and CES under BAU With technological progress 50.00% 40.00% 30.00% 20.00% 10.00% Relative diff 0.00% year 31

32 Uncertainty of capital stock demand Between C-D and CES under BAU Without technological progress Absolute diff ( billion, 2000 price) year Absolute diff ( billion, 2000 price) 32

33 Uncertainty of capital stock demand Between C-D and CES under BAU Without technological progress 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% Relative diff 0.00% year 33

34 The difference of capital stock with- and withouttechnological progress under BAU scenario CES production function Absolute diff ( billion, 2000 price) year Absolute diff ( billion, 2000 price) 34

35 The difference of capital stock with- and withouttechnological progress under BAU scenario CES production function Relative diff 120% 100% 80% 60% 40% 20% 0% year 35

36 The difference of capital stock with- and withouttechnological progress under BAU scenario C-D production function Absolute diff ( billion, 2000 price) year 36

37 The difference of capital stock with- and withouttechnological progress under BAU scenario C-D production function Relative diff 140% 120% 100% 80% 60% 40% 20% 0% year 37

38 Uncertainty of capital stock demand Between C-D and CES under EC -----With technological progress Absolute diff( billion, 2000 price) year 38

39 Uncertainty of capital stock demand Between C-D and CES under EC With technological progress Relative diff 50% 40% 30% 20% 10% 0% year 39

40 Uncertainty of capital stock demand Between C-D and CES under EC Without technological progress Absolute diff( billion, 2000 price) year Absolute diff( billion, 2000 price) 40

41 Uncertainty of capital stock demand Between C-D and CES under EC Without technological progress Relative diff 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% year 41

42 The difference of capital stock with- and withouttechnological progress under EC scenario CES production function Absolute diff( billion, 2000 price) year Absolute diff( billion, 2000 price) 42

43 The difference of capital stock with- and withouttechnological progress under EC scenario CES production function Relative diff % 80.00% 60.00% 40.00% 20.00% 0.00% year 43

44 The difference of capital stock with- and withouttechnological progress under EC scenario C-D production function Absolute diff( billion, 2000 price) year Absolute diff( billion, 2000 price) 44

45 The difference of capital stock with- and withouttechnological progress under EC scenario C-D production function % % 80.00% Relative diff 60.00% 40.00% 20.00% 0.00% year 45

46 The incremental capital of CES functions under different scenarios to BAU With TP :8380yuan/tce Without TP:14240 yuan/tce 46

47 The incremental capital of C-D functions under different scenarios to BAU With technological progress (10 4 yuan/tce) BAU-EC ER5-EC ER10-ER5 ER15-ER10 47

48 The incremental capital of C-D functions under different scenarios to BAU Without technological progress (10 4 yuan/tce) incremental capital year BAU-EC ER5-EC ER10-ER5 ER15-ER10 48

49 Conclusion the strong energy supply constraint, the uncertainty of energy-capital substitution asks the huge and uncertain investment to improve energy efficiency and develop new energy to ensure the future sustainable development of China strong constraint of energy availability determines the active energy saving and energy substitution policies must be implemented in China 49

50 Conclusion energy conservation and energy substitution had already asked China increase huge investment to save and substitute energy. So, if real GHG emission=bau emission for China? GHG emission BAU cost EC ER 50

51 Conclusion High substitution elasticity of energy and capital shows the promising prospect that China have huge potential to participate the global GHGs emission reduction cooperation mechanism such as CDM of Kyoto protocol Depreciation year of capital: 20year CO2 Abatement cost: 10 US$ /t co2e----41us$/t co2e 51

52