The long-term relationships among Chinaʹs energy consumption sources and adjustments to its renewable energy policy

To reduce its consumption of coal and oil in its primary energy consumption, China promotes the development of renewable energy resources. I have analysed the long-term relationship among Chinaʹs primary energy consumption sources. Changes in coal consumption lead those in the consumption of other energy sources in the long term. Coal and oil fuels substitute for each other equally. The long-term elasticities of Chinaʹs coal consumption relative to its hydroelectricity consumption were greater than one and nearly equal during the two sample periods. Therefore, increased hydroelectricity consumption did not imply a reduction in coal consumption. China holds abundant hydroelectricity, wind and, solar energy potential. China must prevent an excessive escalation of its economy and resultant energy demand to realise a meaningful substitution of coal with hydroelectricity. Moreover, China must develop and use wind and solar energy sources. Natural gas can be a good substitute for coal, given its moderate price growth and affordable price levels.