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Electricity transmission and its effects on resource misallocation and environmental consequences in China: An economic analysis

Author

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  • Tan, Ruipeng
  • Li, Jun
  • Wang, Feng
  • Yang, Jing

Abstract

This study examines the effects of electricity long-distance transmission, the world's largest spatial reallocation of electricity, on resource misallocation and environmental consequences in China. Using city-level and firm-level data, we find that while long-distance transmission reduces misallocation by 7.6% in connected cities, it also causes pollution displacement and environmental inequality. Specifically, pollution is transferred from eastern to other regions. We also explore the differing impacts of direct and alternating current transmission, with direct current having a stronger effect, suggesting that transmission stability is key to reducing misallocation. Given the coal-dominated energy structure, pollution transfer remains an ongoing challenge. The paper concludes with policy suggestions to improve the efficiency and fairness of electricity transmission.

Suggested Citation

  • Tan, Ruipeng & Li, Jun & Wang, Feng & Yang, Jing, 2025. "Electricity transmission and its effects on resource misallocation and environmental consequences in China: An economic analysis," Energy Policy, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:enepol:v:198:y:2025:i:c:s030142152400510x
    DOI: 10.1016/j.enpol.2024.114490
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