Estimating energy interindustry linkages based on the Hypothetical Extraction Method (HEM) in China and USA

Energy efficiency policies can help to reduce energy use and mitigate the effects of climate change. This paper examines the U.S. and Chinese economies by applying HEM to both. Key sectors absorbing more energy from other sectors by purchasing intermediate products from them and, simultaneously, transferring more energy by selling products to the rest of the sectors are identified. This provides insights for decision-making on appropriate energy efficiency policies. It appears that the U.S. economy should focus on the service sector, and the Chinese should focus on the industrial sector.