Are more economic efficient solutions ignored by current policy: Cost-benefit and NPV analysis of coal-fired power plant technology schemes in China

Abstract

The broad spectrum of environmental protection technologies and their health effects have increased concern about path dependency and the “lock-in” effect. This study focuses on China’s coal-fired power plants and their air pollution control technologies, due to the challenge of technology deployment in this sector. Our analysis found that there is a dominant technology scheme of air pollution control in the sector. Alternative schemes with better Net Present Value (NPV) exist beyond the dominant scheme, meaning that long-term economic efficiency is lost by implementing the current mainstream scheme. Facing the complexity and uncertainty around air pollution and climate change, this study suggests that single-technology-dominated environmental protection can pose long-term economic efficiency risks. This paper further points out the implications of technology policy improvement: paying attention to the synergy effects of air pollution technologies, the cultivation of technology diversity, the links between pollution control technology and public health objectives, and cost-benefit analysis together with NPV comparison.