Archive for 7.4 Environmental Impact and Regulation

A Study of the Environmental Regulatory System for China’s Power Industry- The Case of Jiangsu Province

The power industry, as an important infrastructure for and an important part of China’s national economy, is the largest fixed source of air pollution. With the rapid growth of the power industry, power plant emissions are threatening the sustainability of China’s economy and environment. In China’s current environmental regulatory system, environmental protection bureaus are the key agencies that execute environmental regulatory power; and local people’s governments are responsible for the protection of environmental quality in their administrative areas. This type of regulatory system has some weaknesses; non-compliance and weak enforcement of the laws is common. China is facing a pressing need to improve its environmental regulatory system for the power industry and strengthen power industry pollution control. This thesis takes Jiangsu Province as an example. Through investigations and theoretical analysis using the principal-agent model, the thesis analyzes the institutional barriers to environmental regulation of the power industry in Jiangsu Province.

7 Electric Power, 7.4 Environmental Impact and Regulation

Baseline for Carbon Emissions in the Indian and Chinese Power Sectors: Implications for International Carbon Trading

The study examines the dynamics of carbon emissions baselines of electricity generation in Indian states and Chinese provinces in the backdrop of ongoing electricity sector reforms in these countries. Two Indian states-Gujarat and Andhra Pradesh, and three Chinese provinces-Guangdong, Liaoning and Hubei have been chosen for detailed analysis to bring out regional variations that are not captured in aggregate country studies. The study finds that fuel mix is the main driver behind the trends exhibited by the carbon baselines in these five cases. The cases confirm that opportunities exist in the Indian and Chinese electricity sectors to lower carbon intensity mainly in the substitution of other fuels for coal and, to a lesser extent, adoption of more efficient and advanced coal-fired generation technology. Overall, the findings suggest that the electricity sectors in India and China are becoming friendlier to the global environment. Disaggregated analysis, detailed and careful industry analysis is essential to establishing a power sector carbon emissions baseline as a reference for CDM crediting. However, considering all the difficulties associated with the baseline issue, our case studies demonstrate that there is merit in examining alternate approaches that rely on more aggregated baselines.

7 Electric Power, 7.4 Environmental Impact and Regulation

Electricity Demand in the People’s Republic of China: Investment Requirement and Environmental Impact

This paper uses a macroeconomic approach to develop a long-run electricity demand model to analyze the main factors affecting electricity demand in the People’s Republic of China (PRC). As expected, the relationship among variables is more stable and significant after the PRC’s economic reforms (1978), when all factors were more responsive to market forces. An error correction model provides an appropriate framework for forecasting the short-run fluctuations in aggregate electricity demand. The demand elasticity of gross domestic product (GDP) is estimated at about 0.8 after the 1978 economic reforms, lower than that of the pre-reform period (before 1978).The results show that although GDP is still the most important factor for electricity demand, electricity demand is negatively related to structural changes and efficiency improvement. This implies that in a fast growing economy such as the PRC, high GDP growth does not always come with high electricity demand and explains why in 1998, when the PRC had an economic growth rate of 7.8 percent, electricity consumption grew by only 2.8 percent. To meet the forecasted demand growth, the total install capacity incremental is estimated to be 187 GW between 2002-2010, while the required investment costs are estimated to be US$193 billion in 2002 prices. The continued growth of coal-fired power plants will increase the share of the power sector in total sulfur dioxide emission from 50 percent in 2001 to 53 percent in 2005.

7.4 Environmental Impact and Regulation

Electricity Demand in the People’s Republic of China: Investment Requirement and Environmental Impact

This paper uses a macroeconomic approach to develop a long-run electricity demand model to analyze the main factors affecting electricity demand in the People’s Republic of China (PRC). As expected, the relationship among variables is more stable and significant after the PRC.s economic reforms (1978), when all factors were more responsive to market forces. An error correction model provides an appropriate framework for forecasting the short-run fluctuations in aggregate electricity demand. The demand elasticity of gross domestic product (GDP) is estimated at about 0.8 after the 1978 economic reforms, lower than that of the pre-reform period (before 1978). The results show that although GDP is still the most important factor for electricity demand, electricity demand is negatively related to structural changes and efficiency improvement. This implies that in a fast growing economy such as the PRC, high GDP growth does not always come with high electricity demand and explains why in 1998, when the PRC had an economic growth rate of 7.8 percent, electricity consumption grew by only 2.8 percent. To meet the forecasted demand growth, the total install capacity incremental is estimated to be 187 GW between 2002-2010, while the required investment costs are estimated to be US$193 billion in 2002 prices. The continued growth of coal-fired power plants will increase the share of the power sector in total sulfur dioxide emission from 50 percent in 2001 to 53 percent in 2005.

7.4 Environmental Impact and Regulation