IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v57y2019icp1-15.html
   My bibliography  Save this article

Deregulation of power generation planning and elimination of coal power subsidy in China

Author

Listed:
  • Yuan, Jiahai
  • Guo, Xiaoxuan
  • Zhang, Weirong
  • Chen, Sisi
  • Ai, Yu
  • Zhao, Changhong

Abstract

In this research, we define three kinds of subsidy to coal power under the existing institutional structure in China. They are an environmental subsidy, a squeezing-out renewable subsidy, and a price-protection subsidy. Based on a practical account framework, solid dataset, and reasonable assumptions, we estimate a total subsidy of 263.7 billion Chinese Yuan in 2016. We also provide a reference estimate on environmental subsidy by using the Externality Cost approach. Though these subsidies will be removed by 2020, with the deregulation of the power sector, such a shift will trigger stranded asset risks. We conclude with policy implications for the deregulation of power generation planning and market reform to Chinese policymakers.

Suggested Citation

  • Yuan, Jiahai & Guo, Xiaoxuan & Zhang, Weirong & Chen, Sisi & Ai, Yu & Zhao, Changhong, 2019. "Deregulation of power generation planning and elimination of coal power subsidy in China," Utilities Policy, Elsevier, vol. 57(C), pages 1-15.
    • Handle: RePEc:eee:juipol:v:57:y:2019:i:c:p:1-15
    DOI: 10.1016/j.jup.2019.01.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S095717871730348X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jup.2019.01.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kolbe, A Lawrence & Tye, William B, 1996. "Compensation for the risk of stranded costs," Energy Policy, Elsevier, vol. 24(12), pages 1025-1050, December.
    2. Bhagwat, Pradyumna C. & Richstein, Jörn C. & Chappin, Emile J.L. & de Vries, Laurens J., 2016. "The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources," Utilities Policy, Elsevier, vol. 39(C), pages 13-28.
    3. Zhao, Changhong & Zhang, Weirong & Wang, Yang & Liu, Qilin & Guo, Jingsheng & Xiong, Minpeng & Yuan, Jiahai, 2017. "The economics of coal power generation in China," Energy Policy, Elsevier, vol. 105(C), pages 1-9.
    4. Yuan, Jiahai & Lei, Qi & Xiong, Minpeng & Guo, Jingsheng & Hu, Zheng, 2016. "The prospective of coal power in China: Will it reach a plateau in the coming decade?," Energy Policy, Elsevier, vol. 98(C), pages 495-504.
    5. Madian, Alan L., 1997. "Meaningful restructuring: resolving the stranded cost dilemma," The Electricity Journal, Elsevier, vol. 10(1), pages 62-71.
    6. W. M. Corden, 1966. "The Structure of a Tariff System and the Effective Protective Rate," Journal of Political Economy, University of Chicago Press, vol. 74(3), pages 221-221.
    7. Ben Caldecott, 2017. "Introduction to special issue: stranded assets and the environment," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 7(1), pages 1-13, January.
    8. Yuan, Jiahai & Li, Peng & Wang, Yang & Liu, Qian & Shen, Xinyi & Zhang, Kai & Dong, Liansai, 2016. "Coal power overcapacity and investment bubble in China during 2015–2020," Energy Policy, Elsevier, vol. 97(C), pages 136-144.
    9. Gordon, Kenneth & Olson, Wayne P., 1999. "Getting it Right: Filling the Gaps in FERC's Stranded Cost Policies," The Electricity Journal, Elsevier, vol. 12(4), pages 69-79, May.
    10. van der Veen, Reinier A.C. & Hakvoort, Rudi A., 2016. "The electricity balancing market: Exploring the design challenge," Utilities Policy, Elsevier, vol. 43(PB), pages 186-194.
    11. Lin, Jiang & Kahrl, Fredrich & Liu, Xu, 2018. "A regional analysis of excess capacity in China’s power systems," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt44j2w0d0, Department of Agricultural & Resource Economics, UC Berkeley.
    12. Joskow, Paul L., 1996. "Does stranded cost recovery distort competition?," The Electricity Journal, Elsevier, vol. 9(3), pages 31-45, April.
    13. Zhan-Ming Chen, 2017. "Inventory and Distribution of Energy Subsidies of China," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guo, Hongye & Davidson, Michael R. & Chen, Qixin & Zhang, Da & Jiang, Nan & Xia, Qing & Kang, Chongqing & Zhang, Xiliang, 2020. "Power market reform in China: Motivations, progress, and recommendations," Energy Policy, Elsevier, vol. 145(C).
    2. Qiang Wang & Thomas Dogot & Xianlei Huang & Linna Fang & Changbin Yin, 2020. "Coupling of Rural Energy Structure and Straw Utilization: Based on Cases in Hebei, China," Sustainability, MDPI, vol. 12(3), pages 1-21, January.
    3. Xiaonan Wang & Licheng Wang & Jianping Chen & Shouting Zhang & Paolo Tarolli, 2020. "Assessment of the External Costs of Life Cycle of Coal: The Case Study of Southwestern China," Energies, MDPI, vol. 13(15), pages 1-26, August.
    4. Li, Yuan & Zhou, You & Yi, Bo-Wen & Wang, Ya, 2021. "Impacts of the coal resource tax on the electric power industry in China: A multi-regional comprehensive analysis," Resources Policy, Elsevier, vol. 70(C).
    5. Yang, Zhiqing & Liang, Jing, 2023. "The environmental and economic impacts of phasing out cross-subsidy in electricity prices: Evidence from China," Energy, Elsevier, vol. 284(C).
    6. Haonan Zhang & Xingping Zhang & Jiahai Yuan, 2020. "Coal power in China: A multi‐level perspective review," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 9(6), November.
    7. Wang, Yadong & Mao, Jinqi & Chen, Fan & Wang, Delu, 2022. "Uncovering the dynamics and uncertainties of substituting coal power with renewable energy resources," Renewable Energy, Elsevier, vol. 193(C), pages 669-686.
    8. Wang, Peng & Yang, Muyi & Mamaril, Kristy & Shi, Xunpeng & Cheng, Beibei & Zhao, Daiqing, 2021. "Explaining the slow progress of coal phase-out: The case of Guangdong-Hong Kong-Macao Greater Bay Region," Energy Policy, Elsevier, vol. 155(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Yongpei & Yan, Weilong & Komonpipat, Supak, 2019. "How does the capacity utilization of thermal power generation affect pollutant emissions? Evidence from the panel data of China's provinces," Energy Policy, Elsevier, vol. 132(C), pages 440-451.
    2. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    3. Wang, Delu & Wan, Kaidi & Song, Xuefeng, 2020. "Understanding coal miners’ livelihood vulnerability to declining coal demand: Negative impact and coping strategies," Energy Policy, Elsevier, vol. 138(C).
    4. Wang, Yongpei & Yan, Weilong & Zhuang, Shangwen & Zhang, Qian, 2019. "Competition or complementarity ? The hydropower and thermal power nexus in China," Renewable Energy, Elsevier, vol. 138(C), pages 531-541.
    5. Haonan Zhang & Xingping Zhang & Jiahai Yuan, 2020. "Coal power in China: A multi‐level perspective review," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 9(6), November.
    6. Delu Wang & Xun Xue & Yadong Wang, 2021. "Overcapacity Risk of China’s Coal Power Industry: A Comprehensive Assessment and Driving Factors," Sustainability, MDPI, vol. 13(3), pages 1-21, January.
    7. Lin, Jiang & Xu Liu, & Gang He,, 2020. "Regional electricity demand and economic transition in China," Utilities Policy, Elsevier, vol. 64(C).
    8. Zhao, Changhong & Zhang, Weirong & Wang, Yang & Liu, Qilin & Guo, Jingsheng & Xiong, Minpeng & Yuan, Jiahai, 2017. "The economics of coal power generation in China," Energy Policy, Elsevier, vol. 105(C), pages 1-9.
    9. Yuan, Jiahai & Wang, Yang & Zhang, Weirong & Zhao, Changhong & Liu, Qian & Shen, Xinyi & Zhang, Kai & Dong, Liansai, 2017. "Will recent boom in coal power lead to a bust in China? A micro-economic analysis," Energy Policy, Elsevier, vol. 108(C), pages 645-656.
    10. Yan Xu & Junjie Kang & Jiahai Yuan, 2018. "The Prospective of Nuclear Power in China," Sustainability, MDPI, vol. 10(6), pages 1-21, June.
    11. Minpeng Xiong & Xiaowen Yang & Sisi Chen & Fulian Shi & Jiahai Yuan, 2019. "Environmental Stress Testing for China’s Overseas Coal Power Investment Project," Sustainability, MDPI, vol. 11(19), pages 1-27, October.
    12. Qian Zhang & Christopher Kennedy & Tao Wang & Wendong Wei & Jiashuo Li & Lei Shi, 2020. "Transforming the coal and steel nexus for China's eco‐civilization: Interplay between rail and energy infrastructure," Journal of Industrial Ecology, Yale University, vol. 24(6), pages 1352-1363, December.
    13. Simshauser, Paul, 2017. "Monopoly regulation, discontinuity & stranded assets," Energy Economics, Elsevier, vol. 66(C), pages 384-398.
    14. Jiahai Yuan & Mengya Wu & Weirong Zhang & Yu Guo & Minpeng Xiong, 2018. "Coal Power Environmental Stress Testing in China," Sustainability, MDPI, vol. 10(7), pages 1-19, June.
    15. Liu, Shuangquan & Yang, Qiang & Cai, Huaxiang & Yan, Minghui & Zhang, Maolin & Wu, Dianning & Xie, Mengfei, 2019. "Market reform of Yunnan electricity in southwestern China: Practice, challenges and implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 113(C), pages 1-1.
    16. Zhang, Xiaohan & Winchester, Niven & Zhang, Xiliang, 2017. "The future of coal in China," Energy Policy, Elsevier, vol. 110(C), pages 644-652.
    17. Changhong Zhao & Yu Guo & Jiahai Yuan & Mengya Wu & Daiyu Li & Yiou Zhou & Jiangang Kang, 2018. "ESG and Corporate Financial Performance: Empirical Evidence from China’s Listed Power Generation Companies," Sustainability, MDPI, vol. 10(8), pages 1-18, July.
    18. Zhu, Yanlei & Song, Yan & Yuan, Jiahai, 2021. "Structural distortion and the shortage of peak-load power resources in China: A screening curve approach and case study of Shandong Province," Utilities Policy, Elsevier, vol. 70(C).
    19. Liu, HuiHui & Zhang, ZhongXiang & Chen, Zhan-Ming & Dou, DeSheng, 2019. "The impact of China's electricity price deregulation on coal and power industries: Two-stage game modeling," Energy Policy, Elsevier, vol. 134(C).
    20. Jiahai Yuan & Yurong Zeng & Xiaoxuan Guo & Yu Ai & Minpeng Xiong, 2018. "Electric Power Investment Risk Assessment for Belt and Road Initiative Nations," Sustainability, MDPI, vol. 10(9), pages 1-21, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:57:y:2019:i:c:p:1-15. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.sciencedirect.com/journal/utilities-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.