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Coal lumps vs. electrons: How do Chinese bulk energy transport decisions affect the global steam coal market?

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  • Paulus, Moritz
  • Trüby, Johannes

Abstract

This paper demonstrates the ways in which different Chinese bulk energy transport strategies affect the future steam coal market in China and in the rest of the world. An increase in Chinese demand for steam coal will lead to a growing need for additional domestic infrastructure as production hubs and demand centers are spatially separated, and domestic transport costs could influence the future Chinese steam coal supply mix. If domestic transport capacity is available only at elevated costs, Chinese power generators could turn to the global trade markets and further increase steam coal imports. Increased Chinese imports could then yield significant changes in steam coal market economics on a global scale. This effect is analyzed in China, where coal is mainly transported by railway, and in another setting where coal energy is transported as electricity. For this purpose, a spatial equilibrium model for the global steam coal market has been developed. One major finding is that if coal is converted into electricity early in the supply chain, worldwide marginal costs of supply are lower than if coal is transported via railway. Furthermore, China's dependence on international imports is significantly reduced in this context. Allocation of welfare changes particularly in favor of Chinese consumers while rents of international producers decrease.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 6 ()
Pages: 1127-1137

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Handle: RePEc:eee:eneeco:v:33:y:2011:i:6:p:1127-1137

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Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: Steam coal market; China; Coal-by-wire; Energy market modeling; Bulk energy transport;

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Cited by:
  1. Haftendorn, C. & Kemfert, C. & Holz, F., 2012. "What about coal? Interactions between climate policies and the global steam coal market until 2030," Energy Policy, Elsevier, vol. 48(C), pages 274-283.
  2. Trüby, Johannes, 2012. "Strategic Behaviour in International Metallurgical Coal Markets," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2012-12, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  3. Nagl, Stephan, 2013. "Prices vs. Quantities: Incentives for Renewable Power Generation - Numerical Analysis for the European Power Market," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2013-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  4. Paulus, Moritz, 2012. "How are investment decisions in the steam coal market affected by demand uncertainty and buyer-side market power?," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2012-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  5. Growitsch, Christian & Hecking, Harald & Panke, Timo, 2013. "Supply disruptions and regional price effects in a spatial oligopoly - an application to the global gas market," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2013-8, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  6. Nagl, Stephan, 2013. "The Effect of Weather Uncertainty on the Financial Risk of Green Electricity Producers under Various Renewable Policies," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2013-15, Energiewirtschaftliches Institut an der Universitaet zu Koeln.

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