From “Coal to Gas” to “Coal to Biomass”: The Strategic Choice of Social Capital in China

Abstract

Currently, the Chinese government is promoting the transformation of clean energy in rural areas to reduce the consumption of coal to cope with the smog. It is mainly based on “coal to gas”. The development of biomass resources in agricultural areas is an alternative means of energy supply. In order to improve rural energy structure, we propose to upgrade “coal to gas” to “coal to biomass” derived from centralized biogas production (CBP) and straw-briquetting fuel (SBF). This study deals with the question of financing such projects. The public–private partnership (PPP) model is seen as a response that can mobilize social capital to finance investments in these new modes of production and energy supply in rural areas. Based on an analysis of the strengths, weaknesses, opportunities and threats (SWOT) of the two projects considered above, an analytic hierarchy process (AHP) was carried out with the assistance of experts in order to clarify the strategic choices which are more suitable for investors. First, we built a PPP strategic-decision model. The decision model was divided into four strategies (pioneering strategy, struggling strategy, conservative strategy and striving strategy) and two development intensities (conservative and proactive). We used this method to construct a SWOT–AHP model of the PPP strategy for CBP and SBF based on the investigation from the experts. The strategic-decision model identified that a pioneering strategy based on opportunity type is promised for SBF, while a more aggressive type strategy in struggling strategy is essential for the CBP. In order to encourage investors to adopt a positive and optimistic attitude towards the two projects, the public authorities have a role of guidance to ensure the mobilization of the social capital necessary for the construction of the projects.