Direct and indirect energy use in China and the United States

Greenhouse gas reduction and energy saving are becoming two important issues in both industrialized and developing countries, and policymakers are developing means to reduce total domestic energy use. We evaluate and compare the direct and the indirect energy use both in the People's Republic of China (China) and the United States of America (US) by looking at a series of hybrid energy input-output tables (1997, 2002, and 2007). We also apply SDA (structural decomposition analysis), to identify the factors causing energy intensity (energy use per unit of gross domestic product) to differ between the two countries, which lead to potential energy-saving options. Our results show that, besides the differences in direct energy use, huge differences also exist in indirect energy use between the two countries. Differences in indirect energy use are mainly due to differences in technology. Technological change and industrial-structure change are key factors to explain the inequality of energy intensity, while there is a significant trend towards the convergence of sectoral energy efficiency between the two countries.