kilograms of coal equivalent per metric ton in 1985 to 730 kilograms of coal equivalent per metric ton in 2007—a drop in energy use per metric ton of steel of 36%. By 2010 energy efficiency at Baosteel was 25% better than the rest of China’s steel industry and it was near the energy efficiency achieved by POSCO, Korea’s iron and steel giant (Baosteel interviews, January 2011 and annex tables in Rock and Jiang 2013).<sup>91</sup>

# **IV. Tracking Industry Level CO2 Emissions and Intensities**

If China’s industrial and technology policies promoted the kind of technological learning and energy savings within enterprises described in our case studies, we should be able to see significant improvements in energy efficiency at the industry level in China’s cement, iron and steel, and pulp and paper industries. An econometric study by Fisher-Vanden, et al (2013) provides evidence of these broader industry developments. The paper uses a KLEM type model on a panel sample of large and medium sized enterprises between 1999 and 2004 for the three abovementioned industries, as well as for aluminum. In a panel regression of the four industries, three characteristics of enterprises—the relative price of energy, own enterprise investments in technological learning and own enterprise investments in technological learning interacted with the relative price of energy —all reduce energy intensity.

While our enterprise level case studies and empirical work are indicative of the impact of technological learning on energy and CO2 intensities in these four industries, neither tells the whole story itself. Our case studies might not be indicative of industry wide developments. In addition, our econometric work covers a relatively narrow time frame. . To broaden our information base, we asked the highly skilled Chinese technical experts with whom we collaborated in studies of the four industries to develop industry wide estimates of improvements in energy efficiency and CO2 intensity from specific investments in a myriad of minor process innovations<sup>92</sup> and major technological transformations.<sup>93</sup> In addition to this technological information, we collected industry level data from 1985 to 2010 on physical production, energy use by energy type, composition of the production scale of enterprises, and production technology in use. By combining these data with the technological information on efficiency improvements, we can provide a general picture of large reductions in CO2 intensity and CO2 emissions in these industries relative to what would have occurred in a counterfactual “business as usual” with the same rates of production, but without the technical improvements.

> 91 The decline in energy efficiency in 2000 occurred as China dismantled its mandatory energy efficiency program as it was shifting from a planned to a more market oriented economy.

> 92 Minor process improvements include improving the energy efficiency of vertical shaft and rotary kilns and recovering heat to generate electricity in cement (Rock and Cui 2013), materials substitution, soda recovery, and recovering heat to generate electricity  in pulp and paper (Rock and Song 2013).

> 93 Major technological transformations include closing small plants using antiquated technologies in all four industries and replacing them with large scale state of the art production facilities, shifting to blended cement (Rock and Cui 2013); reducing the iron to steel ratio by replacing blast furnaces with electric arc furnaces, closing antiquated beehive coke ovens and replacing them with advanced coke ovens, and adopting coke dry quenching (Rock and Jiang 2013); and shifting from the energy inefficient Sinter and Bayer-Sinter processes for making alumina to the Bayer process, as well as phasing out Soderberg cells for making primary aluminum and shifting to large cells (Rock and Wang 2013).

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