Analysis of the Long-Term Impact of Energy Expenditure on Economic Growth: A Case Study of China

In this study, we use the term “energy expenditure” to calculate the direct and indirect energy costs invested in the extraction and conversion of net energy at the end of use in China. In this study, less energy expenditure is assumed to lead to more net energy to fulfill human psychological needs and to develop the economic system. However, in reality, energy expenditure is inevitable, and the question of what maximum energy expenditure is tolerable for economic growth remains. Therefore, we calculated the energy expenditure for China based on embodied energy theory and the IO table from 1987 to 2015 and then used a multivariate linear regression model to test the maximum tolerable level of energy expenditure in China. The results show that China’s economic system needs 3217 mtce net energy to ensure that the average annual GDP growth remains higher than 5% into the 2030s, which means that energy expenditure cannot be higher than 45.44% in 2030. According to the EROI forecast, EROI will drop to 1.52:1 in 2030, and the energy expenditure level will reach up to 64%. This figure is far above the maximum tolerable level of energy expenditure of 45.44%. If the level of energy expenditure exceeds this limit, the energy industry will hardly supply enough net energy to support economic development in 2030.