Improving energy consumption structure: A comprehensive assessment of fossil energy subsidies reform in China

Fossil energy subsidies reform would be an effective way to improve the energy consumption structure; however, the reform needs to be assessed comprehensively beforehand as it would exert uncertain impacts on economy, society and environment. In this paper, we use price-gap approach to estimate the fossil energy subsidies of China, then establish CGE model that contains pollutant emissions accounts and CO2 emissions account to stimulate the fossil energy subsidies reform under different scenarios, and the environmental economic analysis concept is introduced to monetize the pollutant reduction benefits. Furthermore, we analyze the possibility and scope of improving the energy consumption structure from the perspective of technical and economic analysis. Analytical results show that the energy consumption structure could be improved by different extent by removing coal or oil subsidies, while the economic and social indexes will be influenced distinctively. Meanwhile, the effects of cutting coal subsidies are more feasible than that of cutting oil subsidies overall. It is recommended to implement fossil energy subsidies gradually, cut the coal first and then cut oil subsidies successively.

[1]  S. Devarajan,et al.  Environmental Policy Analysis: an Environmental Computable General-equilibrium Approach for Developing Countries , 2022 .

[2]  M. Shafie-Pour Motlagh,et al.  An Environmental & Economic Analysis for Reducing Energy Subsidies , 2007 .

[3]  Yi-Ming Wei,et al.  The effect of energy end-use efficiency improvement on China’s energy use and CO2 emissions: a CGE model-based analysis , 2009 .

[4]  S. Robinson,et al.  A standard computable general equilibrium (CGE) model in GAMS , 2002 .

[5]  Y. Saboohi.  An evaluation of the impact of reducing energy subsidies on living expenses of households , 2001 .

[6]  Manuel Frondel,et al.  Hard Coal Subsidies: A Never-Ending Story? , 2006 .

[7]  R. Steenblik,et al.  Reform of coal policies in Western and Central Europe: Implications for the environment , 1995 .

[8]  M. Thring.  World Energy Outlook , 1977 .

[9]  Aie.  World Energy Outlook 2009 , 2000 .

[10]  John C. Dernbach,et al.  FEDERAL FOSSIL FUEL SUBSIDIES AND GREENHOUSE GAS EMISSIONS: A Case Study of Increasing Transparency for Fiscal Policy , 2001 .

[11]  Boqiang Lin,et al.  Estimates of energy subsidies in China and impact of energy subsidy reform , 2011 .

[12]  Ikhupuleng Dube,et al.  Impact of energy subsidies on energy consumption and supply in Zimbabwe. Do the urban poor really benefit , 2003 .

[13]  M. Espey.  Gasoline demand revisited: an international meta-analysis of elasticities , 1998 .

[14]  THE EFFECT OF EXISTING DISTORTIONS IN ENERGY MARKETS ON THE COSTS OF POLICIES TO REDUCE CO2 EMISSIONS: EVIDENCE FROM GREEN , 1992 .

[15]  S. Gangopadhyay,et al.  Reducing subsidies on household fuels in India: how will it affect the poor? ☆ , 2005 .

[16]  T. Morgan,et al.  Reforming energy subsidies : opportunities to contribute to the climate change agenda , 2008 .

[17]  G. Brannon.  Energy taxes and subsidies;: A report to the energy policy project of the Ford Foundation , 1974 .

[18]  Bereket Kebede,et al.  Energy subsidies and costs in urban Ethiopia: The cases of kerosene and electricity , 2006 .

[19]  Miles K. Light.  Coal Subsidies and Global Carbon Emissions , 1999 .

[20]  Warwick McKibbin,et al.  Reducing coal subsidies and trade barriers: their contribution to greenhouse gas abatement , 2000, Environment and Development Economics.