Economic evaluation of environmental externalities in China's coal-fired power generation

Serious environmental externalities exist in China's power industry. Environmental economics theory suggests that the evaluation of environmental externality is the basis of designing an efficient regulation. The purposes of this study are: (1) to identify Chinese respondents’ preferences for green development of electric power industry and the socio-economic characteristics behind them; (2) to investigate the different attitudes of the respondents towards pollution and CO₂ reduction; (3) to quantitatively evaluate the environmental cost of China's coal-fired power generation. Based on the method of choice experiments (CE) and the 411 questionnaires with 2466 data points, we found that Chinese respondents prefer PM2.5, SO₂ and NO_x reduction to CO₂ reduction and that the environment cost of coal-fired power plants in China is 0.30 yuan per kWh. In addition, we found that the socio-economic characteristics of income, education, gender, and environmental awareness have significant impacts on respondents’ choices. These findings indicate that the environmental cost of coal-fired power generation is a significant factor that requires great consideration in the formulation of electric power development policies. In addition, importance should also be attached to the implementation of green power price policy and enhancement of environmental protection awareness.