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Economic analysis of coal price-electricity price adjustment in China based on the CGE model

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  • He, Y.X.
  • Zhang, S.L.
  • Yang, L.Y.
  • Wang, Y.J.
  • Wang, J.
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    Abstract

    In recent years, coal price has risen rapidly, which has also brought a sharp increase in the expenditures of thermal power plants in China. Meantime, the power production price and power retail price have not been adjusted accordingly and a large number of thermal power plants have incurred losses. The power industry is a key industry in the national economy. As such, a thorough analysis and evaluation of the economic influence of the electricity price should be conducted before electricity price adjustment is carried out. This paper analyses the influence of coal price adjustment on the electric power industry, and the influence of electricity price adjustment on the macroeconomy in China based on computable general equilibrium models. The conclusions are as follows: (1) a coal price increase causes a rise in the cost of the electric power industry, but the influence gradually descends with increase in coal price; and (2) an electricity price increase has an adverse influence on the total output, Gross Domestic Product (GDP), and the Consumer Price Index (CPI). Electricity price increases have a contractionary effect on economic development and, consequently, electricity price policy making must consequently consider all factors to minimize their adverse influence.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 38 (2010)
    Issue (Month): 11 (November)
    Pages: 6629-6637

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    Handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:6629-6637

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

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    Keywords: Electricity price adjustment CGE Economic influence;

    References

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    1. Rafiq, Shuddhasawtta & Salim, Ruhul & Bloch, Harry, 2009. "Impact of crude oil price volatility on economic activities: An empirical investigation in the Thai economy," Resources Policy, Elsevier, vol. 34(3), pages 121-132, September.
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    10. Zhang, Dayong, 2008. "Oil shock and economic growth in Japan: A nonlinear approach," Energy Economics, Elsevier, vol. 30(5), pages 2374-2390, September.
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    Cited by:
    1. Qin Bao & Ling Tang & Zhongxiang Zhang & Han Qiao & Shouyang Wang, 2012. "Impacts of Border Carbon Adjustments on China's Sectoral Emissions: Simulations with a Dynamic Computable General Equilibrium Model," CCEP Working Papers 1202, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
    2. He, Yongxiu & Wang, Bing & Wang, Jianhui & Xiong, Wei & Xia, Tian, 2013. "Correlation between Chinese and international energy prices based on a HP filter and time difference analysis," Energy Policy, Elsevier, vol. 62(C), pages 898-909.
    3. Liu, Ming-Hua & Margaritis, Dimitris & Zhang, Yang, 2013. "Market-driven coal prices and state-administered electricity prices in China," Energy Economics, Elsevier, vol. 40(C), pages 167-175.
    4. Liu, Zhen & Lieu, Jenny & Zhang, Xiliang, 2014. "The target decomposition model for renewable energy based on technological progress and environmental value," Energy Policy, Elsevier, vol. 68(C), pages 70-79.
    5. Mahmood, Arshad & Marpaung, Charles O.P., 2014. "Carbon pricing and energy efficiency improvement -- why to miss the interaction for developing economies? An illustrative CGE based application to the Pakistan case," Energy Policy, Elsevier, vol. 67(C), pages 87-103.
    6. Moutinho, Victor & Vieira, Joel & Carrizo Moreira, António, 2011. "The crucial relationship among energy commodity prices: Evidence from the Spanish electricity market," Energy Policy, Elsevier, vol. 39(10), pages 5898-5908, October.

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