Why Has China Overinvested in Coal Power?

Mengjia Ren, Lee G. Branstetter, Brian K. Kovak, Daniel Erian Armanios, and Jiahai Yuan
Authors registered in the RePEc Author Service: Lee G. Branstetter and Brian K. Kovak

The Energy Journal, 2021, vol. Volume 42, issue Number 2, 113-134

Abstract: In spite of ambitious investments by the Chinese government in renewable energy sources, the countryýs investment in coal power accelerated in recent years, raising concerns of massive overcapacity and undermining the central policy goal of promoting cleaner energy. In this paper, we ask why this happened, focusing on policies that incentivized excessive entry in the coal power sector and using a simple economic model to illustrate the policies' effects. Using coal-power project approval records from 2013 to 2016, we find the approval rate of coal power was about 3 times higher after approval authority was decentralized, with larger effects in regions producing more coal. We estimate that local coal production accounts for an additional 54GW of approved coal power in 2015 (other things equal), which is about 1/4 of total approved capacity in that year.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Why Has China Overinvested in Coal Power? (2021)
Working Paper: Why Has China Overinvested in Coal Power? (2019)
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