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The Distributional Effect Of Inter-Regional Transmission Grid Expansion On China’S Power Industry

In: ASIAN MITIGATION Insights, Mitigation Actions, Strategies and Policies for Asian Economies

Author

Listed:
  • XU TAN
  • SHENG LIN
  • BAI-CHEN XIE

Abstract

China suffers significant heterogeneities in resource endowments and geological conditions across the regions. Ultra-high voltage (UHV) line construction is a project put forward by the government to boost the inter-regional transmission grid expansion, benefiting economic development by reducing pollutant emissions and absorbing more clean energy. This study investigates the extent to which this giant infrastructure has distributional effects on China’s power industry. We estimate the distributional effect of UHV lines from the perspective of power deployment, carbon emissions, and producer surplus by simulating an equilibrium model of the national electricity market through the mixed complementarity problems (MCPs) method. Furthermore, the Lorenz curve is also employed to investigate the distributional effect of UHV introduction. The results indicate that: (1) the distributional effect of introducing UHV lines is regressive considering its limited contributions to the equalization of environmental and economic welfare; (2) the emission reduction effect of the UHV lines has been improved between 2015 and 2018; (3) power plants with a large installation capacity could seek more economic profits while emitting more pollution; (4) the deployment of clean power in the resourceabundant regions is far below its potential. Meanwhile, we propose improving the structure and technology of the power mix, which can accelerate China’s market-oriented reform of the power system by equally distributing the benefits.

Suggested Citation

  • Xu Tan & Sheng Lin & Bai-Chen Xie, 2025. "The Distributional Effect Of Inter-Regional Transmission Grid Expansion On China’S Power Industry," World Scientific Book Chapters, in: Hongbo Duan (ed.), ASIAN MITIGATION Insights, Mitigation Actions, Strategies and Policies for Asian Economies, chapter 4, pages 67-92, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789819812264_0004
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    Keywords

    Climate Mitigation; Climate Policy Assessment; Climate Change Economics; DSGE; CGE; LEAP; Input-output Model; LCA Analysis; GHG Emissions; Greenhouse Gases; Regional Studies; Policy Measures; Asia; Paris Agreement; Emissions; Carbon; Carbon Emissions; Carbon Neutrality; Decarbonisation; Climate Goals; Mitigation Strategy; Emissions Trading Scheme; China; Green Energy; Global Warming; Climate Change; Carbon Footprint;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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