Costs and benefits of clean heating subsidies for rural residents in northern China

Purpose We aim to comprehensively assess the costs and benefits of energy subsidies in northern rural China. This study focuses on the fuel costs for rural households adopting clean energy and government subsidy expenditures. The benefits include environmental benefits from reducing premature deaths associated with air pollution and low-carbon benefits from decreasing greenhouse gas emissions. Design/methodology/approach Utilizing a translog cost function, this paper calculates the energy price elasticity between coal, natural gas and electricity. Furthermore, it applies this elasticity to study the changes in rural household energy consumption patterns under clean energy transition policies and analyzes the costs and benefits of clean energy subsidies. Findings The results indicate that under government subsidies, the transition to clean energy heating is unlikely to increase the heating burden on residents in most provinces. The total net benefit of “coal to electricity” is 63.29bn CNY and that of “coal to gas” is 59.03bn CNY. On average, transitioning from coal to electricity results in greater net benefits. However, uncertainties exist regarding the low-carbon benefits, contingent on the cleanliness of electricity generation. Disparities in net benefits under the current subsidy approach highlight inequalities, necessitating further scrutiny. Originality/value Compared to using policy effect evaluation methods like DID or scenario assumptions, we identify the transformative effects using energy subsidies from various provinces that are more closely aligned with real-world implementation. Besides, unlike previous studies using uniform heat demand, we acknowledge that divergent costs in distinct transition paths can impact resident heating behavior. This is addressed by incorporating energy price elasticity.

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Publication Details

Journal
China Agricultural Economic Review
Published
2025-05-05
DOI
https://doi.org/10.1108/caer-12-2023-0378
Primary Topic
Energy and Environment Impacts
Type
article
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article

Costs and benefits of clean heating subsidies for rural residents in northern China

Qianqian Peng, Jianglong Li, Dan Li, Hongxun Liu
China Agricultural Economic Review
Energy and Environment Impacts
article

Costs and benefits of clean heating subsidies for rural residents in northern China

Qianqian Peng, Jianglong Li, Dan Li, Hongxun Liu
article en

Abstract

Purpose We aim to comprehensively assess the costs and benefits of energy subsidies in northern rural China. This study focuses on the fuel costs for rural households adopting clean energy and government subsidy expenditures. The benefits include environmental benefits from reducing premature deaths associated with air pollution and low-carbon benefits from decreasing greenhouse gas emissions. Design/methodology/approach Utilizing a translog cost function, this paper calculates the energy price elasticity between coal, natural gas and electricity. Furthermore, it applies this elasticity to study the changes in rural household energy consumption patterns under clean energy transition policies and analyzes the costs and benefits of clean energy subsidies. Findings The results indicate that under government subsidies, the transition to clean energy heating is unlikely to increase the heating burden on residents in most provinces. The total net benefit of “coal to electricity” is 63.29bn CNY and that of “coal to gas” is 59.03bn CNY. On average, transitioning from coal to electricity results in greater net benefits. However, uncertainties exist regarding the low-carbon benefits, contingent on the cleanliness of electricity generation. Disparities in net benefits under the current subsidy approach highlight inequalities, necessitating further scrutiny. Originality/value Compared to using policy effect evaluation methods like DID or scenario assumptions, we identify the transformative effects using energy subsidies from various provinces that are more closely aligned with real-world implementation. Besides, unlike previous studies using uniform heat demand, we acknowledge that divergent costs in distinct transition paths can impact resident heating behavior. This is addressed by incorporating energy price elasticity.

China Agricultural Economic ReviewVol. 17(4)
Xi'an Jiaotong University (CN)
Openalex Percentile: Top 93%
Energy and Environment Impacts
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Costs and benefits of clean heating subsidies for rural residents in northern China — Qianqian Peng, Jianglong Li, et al. · China Agricultural Economic Review (2025) | TGRS Research Map | TGRS