Modeling Interprovincial Cooperative Energy Saving in China: An Electricity Utilization Perspective

Abstract

As the world faces great challenges from climate change and environmental pollution, China urgently requires energy saving, emission reduction, and carbon reduction programmes. However, the non-cooperative energy saving model (NCESM), the simple regulation mode that is China’s main model for energy saving, is not beneficial for optimization of energy and resource distribution, and cannot effectively motivate energy saving at the provincial level. Therefore, we propose an interprovincial cooperative energy saving model (CESM) from the perspective of electricity utilization, with the object of maximizing the benefits from electricity utilization of the cooperation union based on achieving the energy saving goals of the union as a whole. The CESM consists of two parts: (1) an optimization model that calculates the optimal quantities of electricity consumption for each participating province to meet the joint energy saving goal; and (2) a model that distributes the economic benefits of the cooperation among the provinces in the cooperation based on the Shapley value method. We applied the CESM to the case of an interprovincial union of Shanghai, Sichuan, Shanxi, and Gansu in China. The results, based on the data from 2001–2014, show that cooperation can significantly increase the benefits of electricity utilization for each province in the union. The total benefits of the union from utilization of electricity increased 38.38%, or 353.98 billion CNY, while the benefits to Shanghai, Sichuan, Shanxi, and Gansu were 200.28, 58.37, 57.11, and 38.22 billion CNY respectively greater under the CESM than the NCESM. The implementation of the CESM provides the provincial governments not only a flexible and incentive way to achieve short-term goals, but also a feasible and effective path to realize long-term energy saving strategies. To test the impact of different parameter values on the results of the CESM, a sensitivity analysis was conducted. Some policy recommendations are made at the central government level and the provincial government level to promote the implementation of the CESM.

Keywords

• interprovincial cooperation
• energy saving
• optimal model
• game
• Shapley value