Energy consumption in China: Spatial effects of industrial concentration, localization, and diversity

Abstract

This paper discusses the effects of industrial agglomeration on electrical energy consumption from a spatial perspective by highlighting multiple agglomeration types. It is argued that different types of industry agglomeration may exert differentiated effects on energy consumption and their possible spatial interactions. With city sector panel data of China's 285 prefecture-level cities for the period 2003–2013, we adopted the Spatial Durbin Model (SDM) with fixed effects to examine the spatial effects of industrial agglomeration types on energy consumption. The model found that all types of industrial agglomeration play significant and different roles in explaining overall local energy consumption. Second, geographical proximity, diversity, and related variety show the spatial spillover effects on surrounding areas. Third, the spatial energy effects of industrial agglomeration across regions are evidently heterogeneous. Diversity and one of its sub-forms-related variety maintains consumption-saving effects in regions with the initial or intermediate stage of an industry life cycle, while unrelated variety changes over different phases. The results suggest that policymakers scientifically discriminate regional features and guide the agglomerated types of industries in order to balance economic growth with energy conservation.