Why Has China Overinvested in Coal Power?

Mengjia Ren, Lee G. Branstetter, Brian Kovak, Daniel Erian Armanios and Jiahai Yuan

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

Abstract: In spite of ambitious investments by the Chinese government in renewable energy sources, the country’s 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.

Keywords: Coal power; Renewable energy; Overinvestment; Industrial policy; Political economy; China (search for similar items in EconPapers)
Date: 2021
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.5547/01956574.42.2.mren (text/html)

Related works:
Journal Article: Why Has China Overinvested in Coal Power? (2021)
Working Paper: Why Has China Overinvested in Coal Power? (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:42:y:2021:i:2:p:113-134

DOI: 10.5547/01956574.42.2.mren

Access Statistics for this article

More articles in The Energy Journal
Bibliographic data for series maintained by SAGE Publications ().