• Initiative -
  • Type KAPSARC journal article
  • Date 1 November 2016
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Abstract

The fast pace of development in China’s coal industry created bottlenecks in its transportation infrastructure. These bottlenecks likely affected not only China’s domestic coal market, but also global coal markets. In this paper, we estimate the costs and consequences of these bottlenecks using a production and multimodal transportation model. We find that coal transportation inefficiencies increased the price of Chinese domestic coal at coastal locations and thereby influenced global seaborne coal prices. According to our model results, the resulting extra costs of coal supplied to the Chinese economy totaled 228 billion renminbi (RMB) in 2011 and 105 in 2013. The subsequent debottlenecking, on the other hand, has reduced the price of Chinese domestic coal delivered to coastal regions and contributed to the reduction in global seaborne coal prices since 2011. Our analysis also suggests that current tariffs for coal transport, with their embedded taxes to cover investments in rail capacity, result in economic efficiencies similar to charging marginal transportation costs and that planners have not introduced distortions that impose significant additional costs on the Chinese economy. Many projects that expanded transport capacity delivered strongly positive rates of return. However, some have poor or negative rates of return, which can reflect either overinvestment or preinvestment in future needs. © 2016 KAPSARC

http://www.sciencedirect.com/science/article/pii/S0140988316302948

Energy Economics

Authors

Bertrand Rioux

Bertrand Rioux

Bertrand is a research fellow focusing on the impact of market regulation and liberalization in energy markets. An experienced energy systems… Bertrand is a research fellow focusing on the impact of market regulation and liberalization in energy markets. An experienced energy systems model developer (linear optimization and mixed complementary problems), he is working on developing the KAPSARC Energy Model (KEM) as a decision support tool for analyzing price regulation in energy economies. Bertrand has contributed to the development of KEM Saudi Arabia and is the lead developer of KEM China, studying the impact of government regulation in the coal, power and natural gas markets. He was previously employed as a research assistant at the Canadian Space Agency.

Philipp Galkin

Visiting Researcher Philipp is a visiting researcher at KAPSARC, working on the economic and policy aspects of energy supply and trade. Philipp’s… Philipp is a visiting researcher at KAPSARC, working on the economic and policy aspects of energy supply and trade. Philipp’s work at KAPSARC includes evaluating the effect of preferential trade agreements on energy flows, analysis of OPEC energy policy and deriving insights related to China’s energy policy and its impact on global markets through modeling energy supply sectors.

Expertise

  • International economic relations
  • Regional and country studies and policy analysis

Publications See all Philipp Galkin’s publications

Frederic Murphy

Frederic Murphy

Visiting Researcher Frederic is professor emeritus, Fox School of Business, Temple University, where he taught for 30 years. He was a visiting… Frederic is professor emeritus, Fox School of Business, Temple University, where he taught for 30 years. He was a visiting researcher fellow at KAPSARC where he is participating in the development of energy models and writing policy analyses in a range of areas, including domestic energy use in Saudi Arabia, market power in world oil markets, designing and managing income stabilization funds, and China's and India's energy economies. He works mainly in the area of energy-market forecasting and energy policy analysis. Prior to joining Temple, he was at the Energy Information Administration (EIA) of the U.S. Department of Energy and its predecessor, the Federal Energy Administration, where he headed the group that did the economic impact analyses of the bills and laws passed during the Carter administration and developed and ran the forecasting models then used for policy analyses and the forecasts in the EIA Annual Report. He has authored over 100 refereed articles. In one study he was ranked in the 20 most published researchers in his field over a fifty-year span. He was the editor in chief of the journal Interfaces, an area editor for Operations Research, and the Informs Journal on computing, and the Vice President of Publications for INFORMS and its predecessor society, Operations Research Society of America. He has been involved in studying local economic policy issues, including advising the Tax Reform Commission of the City of Philadelphia, estimating the impact on jobs of building casinos in Philadelphia, and political redistricting. He also did a queueing study oil tank vessels on the Delaware River.

Axel Pierru

Program Director Axel is the director of KAPSARC’s Energy and Macroeconomics program. From October 2018 to March 2019, he was KAPSARC’s interim… Axel is the director of KAPSARC's Energy and Macroeconomics program. From October 2018 to March 2019, he was KAPSARC's interim vice president of research. Axel joined KAPSARC in 2011, after spending 15 years at IFP Energies Nouvelles in France, where he led research, consulting and training projects. Axel received his Ph.D. in economics from the Pantheon-Sorbonne University in Paris. He undertakes applied research that combines methodological innovation with practical relevance for policymaking. His research is focused on energy economics, policy, finance, oil pricing, and energy-exporting economies. Axel has been published extensively, with over 40 peer-reviewed journal papers to his name.

Expertise

  • Energy modelling
  • Energy economics
  • Energy policy
  • Oil pricing and finance

Publications See all Axel Pierru’s publications

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