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Market-driven energy pricing necessary to ensure China's power supply

Author

Listed:
  • Wang, Qiang
  • Qiu, Huan-Ning
  • Kuang, Yaoqiu

Abstract

China's rapid economic growth has strained its power supply, as manifested for instance by the widespread 2008 power shortage. The cause for this shortage is thought to be the current Chinese energy pricing system, which is mainly government rather than market controlled. Government-regulated price-caps for coal have seriously affected coal supply. At the same time price-caps for electricity supply have caused suspension of power plant operation. As a result, the average operating time of coal-fired power plants declined 50Â h annually across the nation in the first half of 2008 compared to the previous year, despite clear power shortages. Here, it will be suggested that energy pricing, set by supply and demand may effectively discourage excessive growth in heavy industry, substantially encourage energy conservation and efficiency, and curb the rapid electricity demand in China. It will be argued that a market-oriented electricity pricing mechanism is required for China to secure its future power supply.

Suggested Citation

  • Wang, Qiang & Qiu, Huan-Ning & Kuang, Yaoqiu, 2009. "Market-driven energy pricing necessary to ensure China's power supply," Energy Policy, Elsevier, vol. 37(7), pages 2498-2504, July.
  • Handle: RePEc:eee:enepol:v:37:y:2009:i:7:p:2498-2504
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    References listed on IDEAS

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    1. Fan, Ying & Liao, Hua & Wei, Yi-Ming, 2007. "Can market oriented economic reforms contribute to energy efficiency improvement? Evidence from China," Energy Policy, Elsevier, vol. 35(4), pages 2287-2295, April.
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    Cited by:

    1. Wang, Qiang & Chen, Xi, 2013. "Rethinking and reshaping the climate policy: Literature review and proposed guidelines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 469-477.
    2. repec:eee:rensus:v:79:y:2017:i:c:p:533-543 is not listed on IDEAS
    3. World Bank, 2011. "Climate Change and Fiscal Policy : A Report for APEC," World Bank Other Operational Studies 2734, The World Bank.
    4. repec:gam:jeners:v:10:y:2017:i:5:p:656-:d:97987 is not listed on IDEAS
    5. Li, Ke & Lin, Boqiang, 2015. "How does administrative pricing affect energy consumption and CO2 emissions in China?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 952-962.
    6. Maria Jesus Herrerias and Eric Girardin, 2013. "Seasonal Patterns of Energy in China," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    7. Wang, Qiang & Chen, Xi, 2012. "China's electricity market-oriented reform: From an absolute to a relative monopoly," Energy Policy, Elsevier, vol. 51(C), pages 143-148.
    8. Xia, X.H. & Chen, G.Q., 2012. "Energy abatement in Chinese industry: Cost evaluation of regulation strategies and allocation alternatives," Energy Policy, Elsevier, vol. 45(C), pages 449-458.
    9. Li, Weilin & Xu, Peng & Lu, Xing & Wang, Huilong & Pang, Zhihong, 2016. "Electricity demand response in China: Status, feasible market schemes and pilots," Energy, Elsevier, vol. 114(C), pages 981-994.
    10. Wang, Qiang & Chen, Yong, 2010. "Status and outlook of China's free-carbon electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(3), pages 1014-1025, April.
    11. Wang, Qiang & Li, Rongrong, 2016. "Drivers for energy consumption: A comparative analysis of China and India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 954-962.
    12. Herrerias, M.J. & Joyeux, R. & Girardin, E., 2013. "Short- and long-run causality between energy consumption and economic growth: Evidence across regions in China," Applied Energy, Elsevier, pages 1483-1492.
    13. Leung, Guy C.K. & Cherp, Aleh & Jewell, Jessica & Wei, Yi-Ming, 2014. "Securitization of energy supply chains in China," Applied Energy, Elsevier, pages 316-326.
    14. Li, Zhe & Ouyang, Minggao, 2011. "The pricing of charging for electric vehicles in China—Dilemma and solution," Energy, Elsevier, vol. 36(9), pages 5765-5778.
    15. Akkemik, K. Ali & Göksal, Koray & Li, Jia, 2012. "Energy consumption and income in Chinese provinces: Heterogeneous panel causality analysis," Applied Energy, Elsevier, pages 445-454.
    16. Ming, Zeng & Song, Xue & Mingjuan, Ma & Lingyun, Li & Min, Cheng & Yuejin, Wang, 2013. "Historical review of demand side management in China: Management content, operation mode, results assessment and relative incentives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 470-482.
    17. Ming, Zeng & Li, Shi & Yanying, He, 2015. "Status, challenges and countermeasures of demand-side management development in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 284-294.
    18. Wang, Qiang & Chen, Xi, 2015. "Energy policies for managing China’s carbon emission," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 470-479.
    19. Wang, Qiang & Li, Rongrong, 2016. "Journey to burning half of global coal: Trajectory and drivers of China׳s coal use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 341-346.
    20. Ju, Keyi & Su, Bin & Zhou, Dequn & Wu, Junmin, 2017. "Does energy-price regulation benefit China's economy and environment? Evidence from energy-price distortions," Energy Policy, Elsevier, vol. 105(C), pages 108-119.
    21. Wang, Qiang & Li, Rongrong, 2016. "Impact of cheaper oil on economic system and climate change: A SWOT analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 925-931.
    22. Song, Feng & Zheng, Xinye, 2012. "What drives the change in China's energy intensity: Combining decomposition analysis and econometric analysis at the provincial level," Energy Policy, Elsevier, vol. 51(C), pages 445-453.
    23. Wang, Qiang & Chen, Xi & Jha, Awadhesh N. & Rogers, Howard, 2014. "Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 1-28.
    24. He, Yongxiu & Liu, Yangyang & Wang, Jianhui & Xia, Tian & Zhao, Yushan, 2014. "Low-carbon-oriented dynamic optimization of residential energy pricing in China," Energy, Elsevier, vol. 66(C), pages 610-623.
    25. Zhou, Kaile & Yang, Shanlin, 2015. "Demand side management in China: The context of China’s power industry reform," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 954-965.

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