Study On Coal De-capacity Allocation Among Provinces In China: Based On Multi-objective Programming

For a long time,coal has been the main source of energy in China.After the reform and opening-up,the coal industry gained in momentum and experienced rapid development thanks to the national liberalization of coal price control which was aimed at promoting the marketization of the industry.However,the market was so optimistic then that large amount of capital flowed in to make investment growth far exceed productivity growth,resulting in a serious overcapacity in coal production.After that,as China's economy enters a new normal where exists the economic slowdown,reduction in the energy consumption intensity,strengthening constraints on environment and resource,coupled with weak global economic growth,clean and lowcarbon development has become a global trend.Since 2012,the problem of overcapacity in the coal industry has become increasingly severe.Hence,in 2016,the coal de-capacity went on by cutting down on production capacity as well as balancing supply and demand in order to get out of the dilemma.At the end of the year,the National Energy Administration proposed the “13th Five-Year” development goal for the coal industry,that is,to eliminate backward production capacity and excess capacity of 800 million tons each year by 2020.Since then,coal de-capacity has become the focus of academic and political attention,but currently,the literature related to overcapacity in the coal industry is more focused on the causes,countermeasures and status quo analysis while few is focused on allocations of coal de-capacity.Owing to the special production environment of coal,difficulty in asset recovery and large numbers of unemployed people which lead to heavy resettlement work,corporates and governments are faced with great financial pressures under the high decapacity cost.De-capacity,as the primary task of supply-side structural reforms,emphasizes not just reduction,but also quality improvement by increasing total factor productivity from the perspective of supply.Therefore,this paper aims to establish a multi-objective programming model with minimum de-capacity cost and maximum total factor productivity growth to study on de-capacity allocation among provinces.This paper divides de-capacity cost into two parts: social cost and asset loss.It also uses the boundary function of production function to design the method of calculating decapacity cost.At the same time,the method of Solow residual value is used to measure the total factor productivity growth rate.Based on the coal industry's “13th Five-Year” overall goal of de-capacity,together with the regional coal demand and its balance of transportation and delivery,the use of reasonable capacity utilization intervals puts forward the constraints of the regional production capacity,and solves the multiobjective programming model for de-capacity allocation among provinces.Later,this paper determines the scale of capacity withdrawals by each province,and gets the optimized plans for the allocation of de-capacity among provinces.By comparing the optimized plans with the plans formulated by the provinces,measuring the degree of fairness and analyzing the alteration of optimized plans and target value under different weighted combinations,this paper makes the following conclusions:(1)Coal mining provinces which take up a small fraction has undertaken most of the coal de-capacity tasks.The provinces where the original coal production capacity is relatively large have a high potential for de-capacity,and the scale of production capacity withdrawal is also relatively large.However,due to the larger base of production capacity,the rate of decline is not high;in comparison,the provinces with low coal production capacity have relatively small production capacity withdrawal in scale but high rate of decline because of small capacity base.The major coal-producing provinces are also major provinces for de-capacity,and non-major coal-producing provinces and districts have reduced their production scale,optimized the overall coal production and development,and concentrated on large-scale production bases to achieve intensive development of industrial production.(2)Compared with the plans for coal de-capacity formulated by all provinces,the optimized plans cost less with even greater total factor productivity growth.From the perspective of cost,the optimized plan has a significant cut on cost.The reduction in social costs effectively reduces the pressure on staff settlement,ease financial pressure on corporates and governments,help maintain social stability,further reduce asset losses,ease corporate debt burden,and improve corporate living environment.From the perspective of total factor productivity growth,the optimized plans have led to greater growth,which is consistent with the main purpose of the supply-side structural reform during the new normal.It is not just about reduction,but also is about improvement in quality to enhance total factor productivity based on supply.(3)The optimized plans for the allocation of de-capacity among provinces integrate economy,fairness,and efficiency.Compared with the de-capacity plans set by provinces,the optimized plans are more economical and more efficient.According to the calculation results of Gini coefficient,if the Lorenz curve is plotted according to the de-capacity per capita,then the two plans all belong to the comparatively average category,and the optimized plans have a slight advantage;if the Lorentz curve is plotted according to de-capacity cost per capita,then the optimized plans are at a disadvantage because part of fairness is sacrificed due to the reduction of costs,but the optimized plans still belong to the comparatively average category.This paper enriches the research on the allocation of coal de-capacity among provinces,and provides reference and basis for the allocation of de-capacity in China's coal industry during the period of “Thirteenth Five-Year”.