“Booster” or “obstacle”: Can coal capacity cut policies moderate the resource curse effect? Evidence from Shanxi (China)

Xilong Yao, Hualing Wang, Shuai Shao, Xiaoyu Li and Zhi Guo

Resources Policy, 2022, vol. 75, issue C

Abstract: China’s recent coal capacity cut policies are expected to promote an energy supply-side revolution. However, their real impacts are still uncertain, especially for coal resource-based regions. Based on a dynamic computable general equilibrium (DCGE) model, this is the first study to investigate the effects of output-controlled and investment-controlled coal capacity cut policies on macroeconomy and the environment (including carbon emissions) in Shanxi province, the most typical representative of coal resource-based regions in China. The results show that the output-controlled coal capacity cut policy not only can reduce sulfur emissions and carbon emissions, but also can promote long-term economic growth and households’ income. Moreover, although the output-controlled coal capacity cut policy reduces financial revenues, this kind of policy can weaken the excessive inflow of production factors in coal industry and promote the development of non-coal industries. On the other hand, the investment-controlled coal capacity cut policy does not cause labor outflow from coal industry. This kind of policy can also reduce sulfur emissions and carbon emissions, though it shows a negative impact on macroeconomic factors, such as gross domestic product and welfare. We find that only the output-controlled coal capacity cut policy can effectively moderate the resource curse effect in coal resource-based regions, and therefore, this kind of policy should be the first choice of the Chinese government.

Keywords: Coal resource-based region; Coal capacity cut policy; Dynamic CGE model; Resource curse; Carbon emissions; China (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:75:y:2022:i:c:s0301420721004463

DOI: 10.1016/j.resourpol.2021.102437

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