• Energy Research

By establishing a two-stage model in which a monopolization firm first chooses R&D input and then the quantity of energy, this paper compares the different effects of two regulatory policies: feed-in tariff (FIT) and renewable portfolio standard (PRS). The results show that FIT is more efficient than RPS to increase the quantity of renewable energy (installed capacity) and to stimulate the R&D input to reduce costs. And RPS policy is more efficient to reduce the carbon emissions and to improve the consumer surplus. Apart from existing findings, we cannot obtain the accurate conclusion about the effects of social welfare under the two policies. The effects of two policies on the social welfare heavily depend on the level of negative externality.

Abstract Trading energy efficiency (TEE) is adopted by more and more countries to cope with global climate change. This article studies the effects of TEE by investigating an optimization model, and several interesting conclusions are obtained. Firstly, it is observed in the model that TEE stimulates energy efficiency innovation, that is, promotes the firms to increase innovation investments. Secondly, it is proved that TEE reduces the marginal emission and total emission of the firms, while outputs are promoted by TEE. Meanwhile, TEE does not reduce energy inputs. Finally, TEE under carbon tax performs better than that without carbon tax. Based on these results, to improve the energy efficiency and reduce the emission of greenhouse gases, it is suggested for the governments to adopt TEE with carbon tax.

Abstract Electric vehicles (EVs) are one of the main tools to decrease greenhouse gas emissions. This study expands a welfare model by considering two goals for improving EV markets in China: subsidizing consumers and incentivizing innovation in EVs by conventional gasoline vehicle (GV) enterprises. By optimizing the welfare model, we analyze the optimal purchase and electricity subsidies. The effects of gasoline and electricity taxes are also analyzed. The results are as follows. First, optimal subsidies include two parts: the environmental cost of GHG emissions, and the part of the enterprise’s profits excluding the innovation risk. Second, the scale of the EV market, the level of technology, and the elasticity coefficient of capital-output can influence optimal subsidies. Third, the strength of both tax effects has an inverted-U shaped relationship with the EV market ratio. Finally, we offer some suggestions for Chinese subsidy regulation based on our study.

Based on existing pollution emission policies, this study addresses the relationship between innovation and energy input along with energy price. Both energy demand and innovative investment are characterized in this work. First, this paper argues that higher energy prices results in lower innovation investment in reduction of emission, higher innovation in production, lower energy demand and lower consumer surplus. Second, the increased effects of emissions on consumers yield lower innovation investment, lower energy demand and lower consumer surplus. Finally, policies for controlling emissions are also discussed in this study. Stricter policies for controlling emissions yield more innovative investments to reduce emissions and less investment to improve production efficiency, resulting in lower demand for energy and lower demand for and higher prices of products. In theory, this study develops the theory about multi-dimensional innovations and captures the relationship between innovative investments to reduce emissions and innovation to improve production efficiency.

Abstract This article captures the effects of energy price fluctuations on the demand and supply of energy. By focusing on the industries that depend on energy inputs, we are able to apply these effects and analyze the Chinese energy industry. Four main sets of results are presented. First, rising energy prices reduce output and social welfare. Second, the energy industry in China has a vertical market structure, which acts as an amplifier of energy price fluctuations that increase with market power of energy firms. Third, environmental objectives can be achieved through energy price regulation, thereby weakening the market power of energy firms. Interestingly, the formula of price regulation needed to achieve the environmental objectives is given. Finally, entry-level regulation can reduce emissions. In summary, this article supports the concept of energy industry regulation by decision-makers.

Abstract This article focuses on energy efficiency subsidy to “top runners” (high energy efficiency firms) in China. By game theory approach, some interesting conclusions are achieved. Firstly, a subsidy stimulates subsidized firms' output and profits. Secondly, a subsidy to “top runners” will reduce total emission. Thirdly, both the environmental effects of market structure and the number of subsidized firms are captured. Finally, under asymmetric information condition, we give the values of subsidy budget to identify firms' energy efficiency. In summary, this article supports the theoretic analysis of potential subsidy for TOP RUNNER program in China.

Environmental pollution, climate warming and other issues have become global issues, and the use of renewable energy as the best way to solve the problem has gradually attracted the attention of all countries. Uncertainty has an important effect on the production of renewable energy. Through a two-stage model, this paper compares the effects of feed-in tariff (FIT) and renewable portfolio standard (RPS) in the developing renewable energy industry under uncertainty. The results show that the FIT have higher expected output and profit, and lower market prices. The risks of production and gain is of relatively more significant. By contrast, the production and profit of RPS remain relatively more stable. When the cost of renewable energy is high, the incentive effect of the policy under FIT is better. As the cost decreases, the incentive effect under RPS will continually increase. In summary, at low cost, the output of renewable energy is proportional to the intensity of the policy under the two policies. We can further conclude that FIT is suitable for the early stage of the development of the renewable energy industry. Once the industry is mature, we can strategically integrate FIT and RPS to ensure a healthy and sustainable development.

Abstract As traditional energy is depleting, it is urgent to search for substitutes of traditional energy. Therefore, policies promoting the development of renewable energy are introduced. Under the condition of non-capital constraints, the green-credit policy and the production subsidy about renewable energy enterprises are compared. The results show that changes of market interest rate provide different implications for regulators to choose between the two policies. Under the condition of capital constraints, it is found that the green-credit policy has positive effect on renewable energy enterprises, and the effect enlarges when the difference between green rates and market interest rate becomes wider. With the increase of carbon tax and the negative externality of traditional energies, the capital flows into renewable energy enterprises. This article provides support for the development of renewable energy and its policies based on the comparison of the two policies. According to the results of this study, it is believed that the implementation of both types of policies will have a more positive effect.

Abstract This article highlights the diversity of conventional energy supply resources. By economic methods, some interesting conclusions are reached. Firstly, we find that energy supply shocks yield energy diversity and high energy price. Secondly, we show that energy supply shocks reduce both consumer surplus and producer surplus. Finally, some policy implications about energy supply resource diversity are suggested to improve energy security.

Abstract As energy and water resources are coupled during the process of manufacturing and consumption, the energy-water nexus should be obtained so as to develop a better understanding of sustainable resources consumption and reservation. In this study, we analyzed the consumption status and pattern of eight categorized industrial sectors based on the framework of input-output analysis (IOA) and network analysis. It indicates that the resource consumption status or pattern is influenced by different industrial characteristics, location and the degree that each industry benefits from policy. Similarly, such influences still exist in the energy and water efficiency measured by Finn's cycling index (FCI). The industrial structural transformation affects the resource consumption structure as well. Given that the energy-water nexus can capture the performance of industrial activities in the network and serve as a measurement of self-evaluation, the results also demonstrate the effectiveness of industrial transformation and upgrading in Anhui province. Policy implications extended from the results can provide the authorities with a reference for other transitional areas between less-developed and developed areas in a developing country. The research expands the application of energy-water nexus system in Anhui Province and provides pertinent suggestions according to the unique feature of the area.