The impact of industry integration on industrial energy efficiency in China

This study examined the impact of industrial integration on industrial energy efficiency in China. We measured industrial energy efficiency using stochastic frontier analysis with Mundlak auxiliary equations and distinguished between effective and ineffective energy use. We empirically examined the causal relationship between industrial integration and industrial energy efficiency using Chinese provincial industrial sector data for 2004 to 2021. The estimates showed that increasing the industry integration level by 1% reduced industrial inefficient energy use by 1.640%, which demonstrates that industry integration improved industrial energy efficiency significantly. The mechanism test showed that industrial integration improved industrial energy consumption through the scale effect. However, industrial integration can improve production efficiency through the technique effect, promote industrial upgrading through the composition effect, and reduce industrial energy intensity. Additionally, the causal relationship between industrial integration and industrial energy efficiency showed regional heterogeneity. The scale effect caused by industrial integration, rebound effect of technological progress, and transregional industrial transfer weakened the energy-saving effect of industrial integration.