The Cost of Energy the Environmental Effects of Coal Production in China
THE COST OF ENERGY – THE ENVIRONMENTAL EFFECTS OF COAL PRODUCTION IN CHINA
Nyakundi Michieka, West Virginia University, Phone +1 304 293 5403, E-mail: nyakundi.michieka@mail.wvu.edu
Jerald Fletcher, West Virginia University, Phone +1 304 293 5499, E-mail:
Wesley Burnett, West Virginia University, Phone +1 304 293 5639, E-mail:
Overview
China, characterized by the world’s largest population, is one of the most rapidly growing countries and the largest consumer of energy in the world. It is possesses the second largest coal reserves globally and is the largest producer of coal in the world. Approximately 95% of the coal produced in China is from underground mining, which causes serious environmental and water quality problems. This paper investigates the relationship between coal production and the environment, using a spatial econometric model. Preliminary results indicate that coal production is affectedby electricity production, mining wages and waste water. Findings from this study are helpful to policy makers for designing environmental policies relating to coal production in China.
The paper will be organized as follows: Section 2 will provide an overview of past literature. Section 3 will cover the methodology. Section 4 will report the empirical results and analysis. Section 5 will present the conclusions and limitations of the study.
Methods
LeSage (1997) found that practitioners engaged in statistical work with regional data samples should try considering spatial configuration in their work. We believe that the relationship between coal production and its environmental ramifications are characterized by spatial dependence—both within a single province and across provinces. In other words, coal production in a local province induces environmental problems in neighboring provinces (Meng et al., 2009). A failure to account for this spatial dependence would imply biased point estimates from models without spatial interaction effects. It has also been realized that geographical factors play an important role in determining the effects of public policy. Thus, using a sample of 31 provinces over the 1995 to 2010 time period, we employ a panel Spatial Error Model (SEM), Spatial Lag Model (SAR) and Spatial Durbin Model (SDM) to control for spatial spillovers from coal production to the environment.
Results
- Electricity generation has the greatest effect on coal production
- Mining wages and waste water affect coal production
- The transportation sector did not have an influence on coal production
Conclusions
From a policy stand point, policy makers in China ought to consider the electricity production as a main driver to driving coal production. Hence, to reduce the negative environmental effects of coal production, other sources of energy should be incorporated into the grid to feed the rising demand for electric power.
References
LeSage, J. P.1997. “Regression Analysis of Spatial Data.” Regional Analysis and Policy 27(2): 83-94.
Meng, L., Q.-y. Feng, Lai Zhou; Ping Lu and Qing-jun Meng. 2009. "Environmental cumulative effects of coal underground mining." Procedia Earth and Planetary Science 1(1): 1280-1284.