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Coal price, economic growth and electricity consumption in China under the background of energy transition

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  • Lin, Boqiang
  • Shi, Fengyuan

Abstract

With the increasing share of renewable energy generation in China's electricity consumption and the dramatic fluctuation of coal prices in recent years, the discussion of the relationship between coal prices, economic growth and electricity consumption in China becomes more relevant. This paper collects monthly data from 2016 to 2023, uses industrial value added to represent economic growth, and explore the relationship between the three through a time-varying parameter vector autoregressive (TVP-VAR) model, which shows that: (1) The mutual impact effects among coal prices, economic growth, and electricity consumption vary across short-, medium- and long-term. This finding underscores the importance of considering different time horizons when evaluating the interactive effects of these variables. (2) Compared to 2017 and 2022, the lagged impact effects among the three have undergone certain changes, indicating that the understanding of their relationships should be contextualized within specific developmental phases. (3) The relationship between coal prices, economic growth, and different categories of electricity consumption exhibits heterogeneous characteristics, suggesting that recognition of these relationships should be based on specific types of power generation. This research enhances the understanding of the dynamic relationship between coal prices and the macroeconomy in China at the current stage.

Suggested Citation

  • Lin, Boqiang & Shi, Fengyuan, 2024. "Coal price, economic growth and electricity consumption in China under the background of energy transition," Energy Policy, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:enepol:v:195:y:2024:i:c:s0301421524004208
    DOI: 10.1016/j.enpol.2024.114400
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