Xie, Lunyu and Ping Qin. 2016. “Spatial Distribution of Coal-Fired Power Plants in China.” EfD Discussion Paper Series 16-25.
Coal has fueled China’s fast growth in the last decades, but it also severely pollutes the air and causes many health issues. The magnitude of the health damage caused by air pollution depends on the location of emission sources. In this paper, we look into the spatial distribution of coal-fired power plants, the major emission sources in China, and investigate the determining factors behind the distribution. We see an overall increase in installed coal-fired power capacity in recent years, with capacity leaps in some provinces. We find that the driving factors are economic development and expansion of electricity grid coverage; the latter factor plays a key role in provinces that are less developed but have abundant coal resources.We also find that firms react to utilization hours, which are assigned by the government, but not to electricity prices, which are set by the government as well. These findings suggest a way to reduce health damages caused by air pollution without harming the economy: attracting coal-fired plants to less populated areas by developing trans-province electricity trade and grid coverage.