Heat tariff and subsidy in China based on heat cost analysis

Highlights: • We propose a method for figuring out heat cost in total thermoelectric cost. • We estimate heat tariff including environmental externality in 29 provinces in China in 2014. • We estimate heat subsidy in 14 provinces in north China in 2014. - Abstract: This paper addresses an important issue surrounding heating supply system reform and seeks to evaluate China's heat tariff and heating subsidy from the perspective of the heating cost in the thermoelectric industry in various provinces in China. We present an algorithm for estimating environmental externality included heat tariff based on the analysis of heat cost in total thermoelectric cost. The results show that during 1999–2014 the average proportion of heating cost in total thermoelectric cost in the north is higher than in the south, which is 26.3% and 24.1% respectively. Generally, subsidies hidden in the existing heat tariffs subsidize heat consumers. Specifically, hidden subsidies subsidize residential consumer more than non-residential consumer in China.