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Resource Misallocation in Electricity Sector: Reform and Policies in China

In: ELECTRICITY MARKET REFORMS IN THE ASEAN, CHINA, INDIA, AND JAPAN

Author

Listed:
  • Chin-Hsien Yu
  • Xinghao Li
  • Dayong Zhang
  • Han Phoumin

Abstract

China has made a firm commitment to achieving carbon neutrality by the middle of this century. To achieve this, reform of the current energy system, especially the electricity sector, is needed. In other words, transforming the traditional fossil fuel-based sector into a renewables-dominated system is critical, and efficient resource allocation among different power sectors is an important way to achieve energy transition. However, resource misallocation in China’s electricity sector leads to significant negative economic consequences. This chapter thus extends the Hsieh and Klenow (2009) framework and applies it to enterprise-level data to model resource misallocation in China’s electricity sector. We find that resource misallocation in electricity sector not only brings about inefficiencies but also affects the progress of the energy transition. Further marketisation reform is important to resolve the problem.

Suggested Citation

  • Chin-Hsien Yu & Xinghao Li & Dayong Zhang & Han Phoumin, 2023. "Resource Misallocation in Electricity Sector: Reform and Policies in China," World Scientific Book Chapters, in: Phoumin Han & Farhad Taghizadeh-Hesary & Fukunari Kimura & Rabindra Nepal (ed.), ELECTRICITY MARKET REFORMS IN THE ASEAN, CHINA, INDIA, AND JAPAN, chapter 3, pages 63-89, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811270581_0003
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    Keywords

    Electricity Market Reform; Market Liberalisation; Tariff Reform; Electricity Trade; Renewable Energy; Resource Allocation; Sustainability; Electricity Market; ASEAN; Southeast Asia; Japan; India; China; Renewable Energy; Energy Transition; Sustainable Electricity Market; Liberalised Electricity Markets; Efficiency; Emission Reduction; Carbon Reduction; Clean Energy; Green Energy; Electricity Tariffs;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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