Reform of the Coal Sector in an Open Economy: The Case of China

Cheap, abundant and easy to transport and store, coal has been produced and consumed to meet people's energy needs. The last decade's growth in global coal use has been driven mainly by developing economies like China, whose phenomenal economic growth has been powered by coal-fired electricity and promoted by the export of manufactured goods. A recent reform focus in China's coal sector is on coal taxation. The paper develops a game-theoretic model tailored to the context of China where coal taxation reform takes place against the background of privatisation of coal firms and an open economy. It finds that the adoption of special coal taxes is optimal for social welfare under most circumstances, but may induce coal firms to commit opportunistic behaviour in the process of privatisation. The paper also cautions about potential resistance to the reform from consumers, coal firms and government officials

Reform of the Coal Sector in an Open Economy: The Case of China

Cheap, abundant and easy to transport and store, coal has been produced and consumed to meet people's energy needs. The last decade's growth in global coal use has been driven mainly by developing economies like China, whose phenomenal economic growth has been powered by coal-fired electricity and promoted by the export of manufactured goods. A recent reform focus in China's coal sector is on coal taxation. The paper develops a game-theoretic model tailored to the context of China where coal taxation reform takes place against the background of privatisation of coal firms and an open economy. It finds that the adoption of special coal taxes is optimal for social welfare under most circumstances, but may induce coal firms to commit opportunistic behaviour in the process of privatisation. The paper also cautions about potential resistance to the reform from consumers, coal firms and government officials

Central-provincial Politics and Industrial Policy-making in the Electric Power Sector in China

In addition to the studies that provide meaningful insights into the complexity of technical and economic issues, increasing studies have focused on the political process of market transition in network industries such as the electric power sector. This dissertation studies the central–provincial interactions in industrial policy-making and implementation, and attempts to evaluate the roles of Chinese provinces in the market reform process of the electric power sector. Market reforms of this sector are used as an illustrative case because the new round of market reforms had achieved some significant breakthroughs in areas such as pricing reform and wholesale market trading. Other policy measures, such as the liberalization of the distribution market and cross-regional market-building, are still at a nascent stage and have only scored moderate progress. It is important to investigate why some policy areas make greater progress in market reforms than others. It is also interesting to examine the impacts of Chinese central-provincial politics on producing the different market reform outcomes. Guangdong and Xinjiang are two provinces being analyzed in this dissertation. The progress of market reforms in these two provinces showed similarities although the provinces are very different in terms of local conditions such as the stages of their economic development and energy structures. The actual reform can be understood as the outcomes of certain modes of interactions between the central and provincial actors in the context of their particular capabilities and preferences in different policy areas. This dissertation argues that market reform is more successful in policy areas where the central and provincial authorities are able to engage mainly in integrative negotiations than in areas where they engage mainly in distributive negotiations

The Influence of Climate Change Considerations on Energy Policy: The Case of Russia

To those working on climate change it is obvious that energy policy should be influenced by climate change considerations. The question that this paper seeks to answer is, to what extent do they influence policy and what contribution can a careful analysis of the costs and benefits of climate change options have on the formulation of that policy. We seek to understand this by looking in some detail at energy policy formulation in Russia. To do so it is necessary to look at the whole set of issues that determine energy policy. These include energy security, macroeconomic and uncertainty factors, local environmental issues and social issues. The analysis has been carried out for a specific case – that of the RF, where energy policy is currently under formulation to 2010. Two options have been looked at: a “High Coal” option, where there would be a substantial change in fuel mix away from gas to coal; and a “High Gas” option where the current fuel mix is retained and the increase in demand is met from all sources in proportion to current use. The analysis shows that, at international prices for fuels, the “High Coal” option is attractive. However, when we include the potential decline of price for natural gas in the European market, the relative preference for this option drops dramatically but it still remains the preferred option. When, account is also taken of the carbon benefits of the High Gas option, using plausible values for carbon, the attraction of the High Coal option is further reduced but not altered. When finally account is taken of the health associated with the lower use of coal in the High Gas option, the preference can be reversed but it requires a critical value for the health benefits. This critical value – at around $3,000 for a life year lost -- is plausible for the RF, if anything the actual value is probably higher. What the analysis shows is the need for a careful evaluation of the different factors determining energy policy. Among these is climate change. It is not the critical factor but it can be an important one. Perhaps more important are the environmental benefits that go with the lower carbon High Gas options.Climate policy, Russia, Ancillary benefits

The Formation of Preferences in Two-level Games: An Analysis of India’s Domestic and Foreign Energy Policy

This paper examines the formation of India’s energy-policy strategy as an act of doubleedged diplomacy. After developing an analytical framework based on the two-level game approach to international relations (IR), it focuses on the domestic context of policy preference formation. India’s energy strategy is shaped by a shortage of energy and the scarcity of indigenous reserves; these problems have together resulted in a growing import dependence in order to sustain economic growth rates, outdated cross-subsidies, overregulation, and nontransparent bureaucratic structures which are adverse to private investment. The Indian government still dominates the energy sector, but large electoral constituencies within the country exert a considerable indirect influence. The paper analyzes how all these domestic necessities combine with India’s general foreign policy goals and traditions to form an overall energy strategy. We finally discuss how this strategy plays out in a competitive international environment where global resources are shrinking (with most claims already distributed) and environmental concerns are on the rise.preferences in two-level games, Indian foreign policy, energy security

Prevention and Control Strategies and Mechanism Analysis for Risk Derivative of Coal Energy Supply Chain

AbstractThis paper analyzes the risk derived source of the coordinated development between the coal production, coal transportation, power generation, coal-powered energy to the electricity supply chain; coal production, coal transportation, power generation, electricity supply to the investment risk between incremental development, incremental development cost risk, price risk mechanism of delivery of development; the risk prevention and control of coal production, coal transportation, power generation, power supply to the electricity supply chain

Stepping Stone or Stumbling Block: Incrementalism and National Climate Change Legislation

This Article examines the effects of incremental domestic legislation on international negotiations to limit greenhouse gas emissions. Mitigating the effects of climate change is a global public good, which, ultimately, only an international agreement can provide. The common presumption (justified or not) is that national legislation is a step forward to an international agreement. This Article analyzes how national legislation can create a demand for international action but can also preempt or frustrate international efforts. The crucial issue, which has been largely ignored thus far, is how incremental steps at the domestic level alter international negotiations. This paper identifies four mechanisms that support the intuitive idea that national legislation will have positive effects: (1) allocating economic resources, (2) providing leadership in international negotiations, (3) creating a demand for a uniform standard, and (4) cultivating public opinion. This Article demonstrates that, on closer examination, each of these mechanisms could hinder international efforts to create a comprehensive agreement. This is by no means an argument against all efforts to curb greenhouse gas emissions at the national level. Instead, this Article calls for a more careful analysis the dynamic political impact of domestic proposals

Ties That Bind: the emergence of entrepreneurs in China

The paper describes the emergence of entrepreneurship in Shanxi province based on fieldwork in the last 6 years. Employing institutional and evolutionary economics shows that both the kind of firms that emerge and the individual behaviour of entrepreneurs reflect a systematic response to the situational constraint all would-be entrepreneurs face, namely a high level of uncertainty and weak institutions. In this situation to establish firms with a weak organisational identity allows to flexibly respond to new opportunities, while a strong reputation for accountability of the owners and managers is needed to get long term business relations started. As the Shanxi sample shows accountability can be achieved by a mix of reviving old economic institutions, hijacking social organisations, and building new business practices. To the extent that old institutions, social organisations and business practices do not spread equally across China, different forms of firms and different forms of entrepreneurship can be expected within China. In short, local cultures matter.evolutionary economics;organisational change;dealing with uncertainty and risk

Nuclear versus Coal plus CCS: A Comparison of Two Competitive Base-load Climate Control Options

In this paper we analyze the relative importance and mutual behavior of two competing base-load electricity generation options that each are capable of contributing significantly to the abatement of global CO2 emissions: nuclear energy and coal-based power production complemented with CO2 capture and storage (CCS). We also investigate how, in scenarios from an integrated assessment model that simulates the economics of a climate-constrained world, the prospects for nuclear energy would change if exogenous limitations on the spread of nuclear technology were relaxed. Using the climate change economics model WITCH we find that until 2050 the resulting growth rates of nuclear electricity generation capacity become comparable to historical rates observed during the 1980s. Given that nuclear energy continues to face serious challenges and contention, we inspect how extensive the improvements of coal-based power equipped with CCS technology would need to be if our model is to significantly scale down the construction of new nuclear power plants.Economic Competition, Electricity Sector, Nuclear Power, Coal Power, CCS, Renewables, Climate Policy