The impacts of climate change on coal-fired power plants: Evidence from China

Abstract

Climate change has been shown to have significant impacts on both power demands and power supplies. However, empical assessments on the latter are still limited. Using monthly data collected from 461 coal-fired power plants in China during the period from 2012 to 2014, this paper explores the influences of a suite of climatic factors and non-climatic factors on power generation efficiency. Furthermore, we project future consequences of efficiency with various climate change scenarios. We find significant heterogeneities in the impacts of temperatures across different types of power plants. On average, a 1 °C increase in monthly temperature is associated with an efficiency reduction of 0.09% and 0.32%, respectively, for electricity-only plants and electricity plus heat plants; this means that China’s northern region—which has more electricity plus heat plants—is more vulnerable to climate change. Future projections suggest that efficiency reductions induced by climate change could lead to substantial power supply declines. Under the RCP8.5 scenarios, the power losses would reach 15.77 billion kW h per year in the 2050s, accounting for 13.5% of Beijing’s electricity consumption in 2019. Back-of-the-envelope calculations show that the improvement in generation efficiency induced by the shut down of small and old units cannot fully offset the supply reduction by shut down itself. Factoring in the rapidly increasing power demands imposes more alarming challenges for stable and sustainable power supplies.

Yabin Da

Assistant Professor

Research interests include Environmental Economics (Climate Change), Applied Econometrics, and Causal Inference.