On the Correlation Between Economic Growth and Energy Consumption: A Case Study of Shandong Province

Taking Shandong province as a sample, the paper finds out that, through the testing of the unit roots and co-integration of the output variables and the energy consumption variables, and the testing of causal directions between energy consumption and economic growth by use of Granger causal model, there exist (i) different co-integrated relations between different energy consumptions and different outputs; (ii) un-i direction causality from economic growth to energy consumption in case of cointegration; and (iii) the significant effects of economic structures on energy consumptions. The findings show that Shandong's economy is not one energy-dependent, and if chosen appropriately, energy conservation policies may be effective in reducing energy consumption without impeding the economic growth. To achieve the 2010's goals, policies should be chosen to promote the development of the tertiary sectors; to stimulate progress of energy conservation technology in industrial sectors, and to adopt electricity-saving production processes. The methods depicted here can be used to study the causal relationship of energy consumption and economic growth for the other provinces.