The Impact of Urbanization and Industrialization on Energy Security: A Case Study of China

Currently, due to the recent unprecedented urbanization and industrialization, energy consumption in China is increasing at an enormous speed. However, this process should go hand in hand with sustainable energy development that is based on three interconnected dimensions: (i) energy security, (ii) energy affordability, and (iii) environmental sustainability. It becomes very obvious that an increase in energy efficiency leads to the increase in both energy security and environmental sustainability. Therefore, inadequate energy efficiency causes energy security and environmental sustainability issues, and thus negatively influences economic development of China (or any other country for that matter). This paper explores the intrinsic relationship among urbanization, industrialization, and energy security, as well as the influencing mechanisms of urbanization and industrialization on energy efficiency using a fixed effect model. The paper employs panel data from 30 provinces in mainland China collected in the time range from 2006 to 2015. Our results demonstrate that urbanization and industrialization can significantly improve energy efficiency. Although energy security level decreases considerably with the rise of energy consumption and population growth, the increase in urbanization and industrialization levels can increase energy security through energy efficiency improvements. Moreover, it appears that changes in disposable income and population structure do not alter the effects of industrialization and urbanization on energy security. We conclude that Chinese provinces with high and low urbanization levels should focus on technological innovation and increase industrial development and technological input, respectively. Local governments in China can formulate policies and regulations and promote urbanization according to local economic development and industrial and population structure. The paper also presents theoretical references and decision support that might help in developing local laws and regulations promoting energy efficiency during urbanization and industrialization.