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Principles, effects and problems of differential power pricing policy for energy intensive industries in China

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  • Lin, Boqiang
  • Liu, Jianghua

Abstract

The Chinese government canceled the preferential power pricing policies for energy intensive industries and imposed a reverse differential pricing policy in order to promote energy efficiency and the adjustment and upgrading of the industrial structure. This article analyzes the principles of China’s differential power pricing policy, the externalities of energy and the modified Ramsey pricing rule, and also points out the policy implications of China’s differential power pricing policy. In our samples, we investigate eight power intensive products in the Henan province with respect to their power consumption per unit (power intensity), electricity cost, total cost, the electricity tariff and profit, in order to test the effects of the differential power pricing policy. The results show that the primary effect of the differential power pricing policy is that enterprises decrease their total costs and improve their productive efficiencies in advance, in anticipating a higher electricity tariff.

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  • Lin, Boqiang & Liu, Jianghua, 2011. "Principles, effects and problems of differential power pricing policy for energy intensive industries in China," Energy, Elsevier, vol. 36(1), pages 111-118.
    • Handle: RePEc:eee:energy:v:36:y:2011:i:1:p:111-118
    DOI: 10.1016/j.energy.2010.11.001
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    Cited by:

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    7. Zheng, Xuemei & Wu, Chengkuan & He, Shijun, 2021. "Impacts of China's differential electricity pricing on the productivity of energy-intensive industries," Energy Economics, Elsevier, vol. 94(C).
    8. Juan Wang & Tao Zhao & Xiaohu Zhang, 2017. "Changes in carbon intensity of China’s energy-intensive industries: a combined decomposition and attribution analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 88(3), pages 1655-1675, September.
    9. 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.
    10. Hu, Junfeng & Kahrl, Fredrich & Yan, Qingyou & Wang, Xiaoya, 2012. "The impact of China's differential electricity pricing policy on power sector CO2 emissions," Energy Policy, Elsevier, vol. 45(C), pages 412-419.
    11. Yang, Mian & Yuan, Yining & Sun, Chuanwang, 2021. "The economic impacts of China's differential electricity pricing policy: Evidence from energy-intensive firms in Hunan Province," Energy Economics, Elsevier, vol. 94(C).
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    13. Maria Chiara D'errico, 2020. "Demand Elasticity in the Italian Power Market: a Bayesian Experiment under dual pricing scheme," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
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    18. Qu, Jianying & Li, Ke & Ye, Ze & Shao, Shuai, 2022. "The impact of differential power pricing policy on firm productivity in China: Evidence from iron and steel firms," Journal of Asian Economics, Elsevier, vol. 80(C).

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