System simulation and policy optimization of China's coal production capacity deviation in terms of the economy, environment, and energy security

Abstract

A large-scale production capacity deviation in China's coal industry has negative impacts on the economy, environment, and energy security. To examine which policies are more conducive to regulating the coal production capacity that deviates from the optimal one in terms of the economy, environment, and energy security, we constructed a dynamic system of the coal production capacity deviation in China, provided various policies, including tax (T), de-capacity (DC), market access management (MAM), system reform (SR) and adjusting the energy structure (ES), examined their effectiveness, and put forward new design procedures for the policy mix. The results show that there are clear differences in the effects of different policies. ES has a quick effect on the coal production capacity, but its long-term effect is limited, whereas the cumulative effect of other policies increases. The time delay for DC to play its role is 1 year, while for other policies it is 3 years. Mixing T, DC, and SR can produce a synergy effect, while the MAM policy exerts a crowding-out effect on these policies. It is suggested that the policy mix in terms of the economy, environment, and energy security should be designed according to the deviation level of the coal production capacity in the next 5–10 years. The policy mix should also incorporate the diversity of the policy objectives, regulation direction, time delay, cumulative effect, and synergy and crowding-out effects. The research provides an effective policy simulation analysis tool and a new approach to designing the policy mix for the coal production capacity management.