Economic and environmental evaluation of coal production in China and policy implications

Abstract

Coal takes up an important position in China’s energy structure. The relationship between coal resource, economic growth and environment protection has been in focus in recent research. However, both research methods and research scope need to be expanded to promote the practical effects of research results, especially studies concerning China’s situation. Here we present a detailed basis for policy making with the following objectives: (1) to examine the relationship between coal development and economic growth in China with multiple linear regression model, using the data from 1997 to 2010 and the indices of the output of raw coal, the gross value of coal industrial output, the new investment in fixed assets of coal, gross domestic product and the gross value of industrial output and (2) to measure the environmental loss caused by coal mining and washing with the given model of environmental damage cost based on the data of 2010 and the indices of waste water, waste gas, waste residues, crop loss, land resource and soil deterioration. The research results show that there is a significant positive correlation between coal development and economic growth in China. The total environmental loss in coal mining and washing in 2010 took up approximately 2.7 % of the average price of coal. Our study recommends that Chinese government and coal companies should (1) keep moderate speed in coal production; (2) increase investment in technology innovation so as to reduce the environmental damage; and (3) increase environment tax.