Evaluating the performance of China’s coal-fired power plants considering the coal depletion cost: A system dynamic analysis

Abstract

China’s coal-fired power plants (CPPs) have higher economics due to ignoring the coal resources externalities. Levying coal resource tax on CPPs conduces to make up for the coal resources externalities, and promote China’s energy transformation. The key issues are to determine the reasonable resource tax rate and to analyze its impact on the performance of CPPs. This paper calculates the coal depletion cost (CDC) in China employing user cost approach, and evaluates the economic and environmental performance of CPPs under different resource tax scenarios by a system dynamics (SD) model. The results reveal that the reasonable coal resource tax rate should be 2.04%–9.70%, and levying resource tax on CPPs will not make CPPs unprofitable and can help to reduce CO2 and pollutants emissions. This paper holds that levying resource tax with low and medium rates (3%–6%) on CPPs can compensate for the CDC and reduce the economic gap between coal-fired power and renewable energy, so as to support the promotion of clean energy.