The environmental benefits of electricity industry restructuring in China: Ownership mixing vs. vertical unbundling

Chang Wang, Yue Guo, Yu Yang and Shiyi Chen

Energy Economics, 2022, vol. 115, issue C

Abstract: Ownership mixing and vertical unbundling are the two pending restructuring reforms in electricity industry in many developing countries, while few studies compared the two reforms, or explored the relative environmental effects of them. In this paper, we empirically examine the effects of ownership mixing and vertical unbundling on electricity generation firms' SO2 emission intensity. We exploit both the ownership mixing and vertical unbundling reforms in China and use a difference-in-differences (DD) strategy to deal with identification. We rely on a unique firm-level dataset that contains comprehensive information on firms' pollution records, production activities, and electricity generation. We find that ownership mixing, while achieving the main reform purpose of increased access to electricity and generation efficiency, also has unintended environmental benefits of significantly and substantially reducing firms' air pollution intensity. The underlying channels are firms' increased electricity generation and better enforcement of environmental regulations. Vertical unbundling, on the other hand, has no significant effects on firms' air pollution. Our findings document an effective and environmentally friendly pathway for electricity industry restructuring in developing countries.

Keywords: Ownership mixing; Vertical unbundling; Electricity industry restructuring; Environmental pollution; China (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:115:y:2022:i:c:s0140988322005096

DOI: 10.1016/j.eneco.2022.106380

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