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Company's affordability of increased energy costs due to climate policies: A survey by sector in China


  • Liu, Xianbing
  • Wang, Can
  • Zhang, Weishi
  • Suk, Sunhee
  • Sudo, Kinichi


This paper estimates the affordability of Chinese companies on energy cost increases due to the introduction of market-based climate policies. The data were collected from 170 respondents mainly from iron and steel, cement and chemical industries, using a multiple-bounded discrete choice (MBDC) format. Estimations indicate that a mean of 8.8% in energy cost increase would be acceptable for all the samples. The chemical companies express a slightly higher affordability, with the mean of acceptable ratios of energy cost increases being 9.9%, while the cement companies show slightly lower affordability with a mean of 7.7%. Econometric analysis confirms that the market competition degree has a significant but negative relationship with the affordability while the company's size is significantly and positively associated with the affordability. Calculations indicate that the mean of affordable energy cost increases roughly equals a carbon price of 83.7 CNY/t-CO2 (about 12 USD/t-CO2) for chemical companies and around 40 CNY/t-CO2 (about 6 USD/t-CO2) for iron and steel and cement sectors. This result provides a meaningful referendum for the development of carbon tax and the establishment of a domestic carbon emissions trading scheme in China, especially from the perspective of surveyed industries.

Suggested Citation

  • Liu, Xianbing & Wang, Can & Zhang, Weishi & Suk, Sunhee & Sudo, Kinichi, 2013. "Company's affordability of increased energy costs due to climate policies: A survey by sector in China," Energy Economics, Elsevier, vol. 36(C), pages 419-430.
  • Handle: RePEc:eee:eneeco:v:36:y:2013:i:c:p:419-430 DOI: 10.1016/j.eneco.2012.09.014

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    Cited by:

    1. Liu, Xianbing & Fan, Yongbin & Wang, Can, 2017. "An estimation of the effect of carbon pricing for CO2 mitigation in China’s cement industry," Applied Energy, Elsevier, vol. 185(P1), pages 671-686.
    2. Dong, Yanli & Ishikawa, Masanobu & Hagiwara, Taiji, 2015. "Economic and environmental impact analysis of carbon tariffs on Chinese exports," Energy Economics, Elsevier, vol. 50(C), pages 80-95.
    3. Liu, Xianbing & Fan, Yongbin & Li, Chen, 2016. "Carbon pricing for low carbon technology diffusion: A survey analysis of China's cement industry," Energy, Elsevier, vol. 106(C), pages 73-86.
    4. Chandra Kiran B. Krishnamurthy & Bengt Kriström, 2016. "Determinants of the Price-Premium for Green Energy: Evidence from an OECD Cross-Section," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(2), pages 173-204, June.

    More about this item


    Affordability; Energy cost; Multiple-bounded discrete choice; Company; China;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming


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