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Principles, effects and problems of differential power pricing policy for energy intensive industries in China

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  • Lin, Boqiang
  • Liu, Jianghua

Abstract

The Chinese government canceled the preferential power pricing policies for energy intensive industries and imposed a reverse differential pricing policy in order to promote energy efficiency and the adjustment and upgrading of the industrial structure. This article analyzes the principles of China’s differential power pricing policy, the externalities of energy and the modified Ramsey pricing rule, and also points out the policy implications of China’s differential power pricing policy. In our samples, we investigate eight power intensive products in the Henan province with respect to their power consumption per unit (power intensity), electricity cost, total cost, the electricity tariff and profit, in order to test the effects of the differential power pricing policy. The results show that the primary effect of the differential power pricing policy is that enterprises decrease their total costs and improve their productive efficiencies in advance, in anticipating a higher electricity tariff.

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  • Lin, Boqiang & Liu, Jianghua, 2011. "Principles, effects and problems of differential power pricing policy for energy intensive industries in China," Energy, Elsevier, vol. 36(1), pages 111-118.
    • Handle: RePEc:eee:energy:v:36:y:2011:i:1:p:111-118
    DOI: 10.1016/j.energy.2010.11.001
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    Cited by:

    1. Lin Zhao, 2023. "The impact of China's Differential Electricity Pricing policy on fossil fuel consumption," International Studies of Economics, John Wiley & Sons, vol. 18(1), pages 97-119, March.
    2. Bigerna, Simona & Bollino, Carlo Andrea, 2016. "Ramsey prices in the Italian electricity market," Energy Policy, Elsevier, vol. 88(C), pages 603-612.
    3. Lin, Boqiang & Xie, Chunping, 2013. "Estimation on oil demand and oil saving potential of China's road transport sector," Energy Policy, Elsevier, vol. 61(C), pages 472-482.
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    5. Cui, Weiwei & Li, Lin, 2018. "A game-theoretic approach to optimize the Time-of-Use pricing considering customer behaviors," International Journal of Production Economics, Elsevier, vol. 201(C), pages 75-88.
    6. Thopil, George Alex & Pouris, Anastassios, 2015. "Aggregation and internalisation of electricity externalities in South Africa," Energy, Elsevier, vol. 82(C), pages 501-511.
    7. Yousefi, Shaghayegh & Moghaddam, Mohsen Parsa & Majd, Vahid Johari, 2011. "Optimal real time pricing in an agent-based retail market using a comprehensive demand response model," Energy, Elsevier, vol. 36(9), pages 5716-5727.
    8. Zheng, Xuemei & Wu, Chengkuan & He, Shijun, 2021. "Impacts of China's differential electricity pricing on the productivity of energy-intensive industries," Energy Economics, Elsevier, vol. 94(C).
    9. Juan Wang & Tao Zhao & Xiaohu Zhang, 2017. "Changes in carbon intensity of China’s energy-intensive industries: a combined decomposition and attribution analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 88(3), pages 1655-1675, September.
    10. Li, Zhe & Ouyang, Minggao, 2011. "The pricing of charging for electric vehicles in China—Dilemma and solution," Energy, Elsevier, vol. 36(9), pages 5765-5778.
    11. Hu, Junfeng & Kahrl, Fredrich & Yan, Qingyou & Wang, Xiaoya, 2012. "The impact of China's differential electricity pricing policy on power sector CO2 emissions," Energy Policy, Elsevier, vol. 45(C), pages 412-419.
    12. Yang, Mian & Yuan, Yining & Sun, Chuanwang, 2021. "The economic impacts of China's differential electricity pricing policy: Evidence from energy-intensive firms in Hunan Province," Energy Economics, Elsevier, vol. 94(C).
    13. Irina Hotz, 2012. "Energy endowments, barriers to trade and industry location in Chinese provinces," IRENE Working Papers 12-02, IRENE Institute of Economic Research.
    14. Maria Chiara D'errico, 2020. "Demand Elasticity in the Italian Power Market: a Bayesian Experiment under dual pricing scheme," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
    15. Fei, Rilong & Lin, Boqiang, 2017. "Estimates of energy demand and energy saving potential in China's agricultural sector," Energy, Elsevier, vol. 135(C), pages 865-875.
    16. Li, Ke & Lin, Boqiang, 2014. "The nonlinear impacts of industrial structure on China's energy intensity," Energy, Elsevier, vol. 69(C), pages 258-265.
    17. Kohler, Marcel, 2014. "Differential electricity pricing and energy efficiency in South Africa," Energy, Elsevier, vol. 64(C), pages 524-532.
    18. Lo, Kevin, 2014. "A critical review of China's rapidly developing renewable energy and energy efficiency policies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 508-516.
    19. Qu, Jianying & Li, Ke & Ye, Ze & Shao, Shuai, 2022. "The impact of differential power pricing policy on firm productivity in China: Evidence from iron and steel firms," Journal of Asian Economics, Elsevier, vol. 80(C).

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