Efficient allocation of coal de-capacity quota among Chinese provinces: a zero-sum gains data envelopment model

ABSTRACT

An efficient coal de-capacity quota allocation scheme is key for accelerating China’s coal supply-side structure reform. This paper allocates the coal de-capacity quota from the perspective of efficiency to seek the optimal capacity allocation in each Chinese province. First, we estimate the coal capacity of 24 coal-producing provinces based on boundary production function model. According to the actual coal overcapacity in each province, we initially allocate the coal de-capacity quota of reducing 0.8 billion tons among them. Then, we optimize the initial allocation plan by using the zero-sum gains data envelopment model (ZSG-DEA) considering backward coal capacity, coal economic output, and coal resource endowment of each province. The results indicate that: First, there is coal overcapacity all over China, and there are obvious differences among the provinces. Second, the optimal allocation results show that the large coal producing provinces, including Shanxi, Inter Mongolia, Shaanxi, etc., need to undertake most of the coal de-capacity tasks, while the old coal producing provinces in northeast and west China should undertake a heavier burden of coal de-capacity. Third, the “one-size fits-all” approach burdens the small coal producing provinces with reducing coal capacity, leading to a general low enthusiasm for coal de-capacity in these regions.