Economic Growth and Energy Consumption: the Empirical Evidence from Shandong Province

Applying Engle-Granger cointegration approach combined with the standard Granger causality test on Shandong data for the period 1978-2004, we find that uni-directional causality exists from economic growth to energy consumption. Further, we find that there exists nonlinear relationship between economic growth and energy consumption in Shandong, and electricity consumption has a heavy influence on Shandong' s economic growth. This means that in order to achieve the policy goal of decreasing energy consumption of per unit GDP by 20% by the year 2010, Shandong province must adjust its heavy electricity consumption sectors.