Quantifying regional economic impacts of CO2 intensity targets in China

By Da Zhang, S. Rausch, V. Karplus, Xiliang Zhang. 2012

161 citations recorded by the source corpus.

To address rising energy use and CO2 emissions, China's leadership has enacted energy and CO2 intensity targets under the Twelfth Five-Year Plan (2011–2015), which are defined at both the national and provincial levels. We develop a computable general equilibrium (CGE) model with global coverage that disaggregates China's 30 provinces and includes energy system detail, and apply it to assess the impact of the current binding provincial CO2 emissions intensity targets. We compare the impact of the provincial targets approach to a single target for China that achieves the same reduction in CO2 emissions intensity at the national level. The national target assumes trading of emissions allowances across provinces, resulting in the least-cost reductions nationwide. We find that the national target results in about 20% lower welfare loss in China relative to the provincial targets approach. Given that the regional distribution of impacts has been an important consideration in the target-setting process, we focus on the changes in provincial-level CO2 emissions intensity, CO2 emissions, energy consumption, and economic welfare. We observe significant heterogeneity across provinces in terms of the energy system response as well as the magnitude of welfare impacts. We further model the current policy of fixed end-use electricity prices in China and find that national welfare losses increase. Assumptions about capital mobility have a substantial impact on national welfare loss, while changing assumptions about the future availability of domestic natural gas resources does not have a large effect.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/fc04dc372a227f96f072b34a24aefec4f7984ea0

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Citations in the corpus

Impacts of carbon trading scheme on air pollutant emissions in Guangdong Province of China (2015, methodology): “Especially, several studies extended the model function to construct multi-region CGE model to assess the impact of interprovincial emission trading or regional carbon intensity targets on economy loss or CO2 emission reduction based on GTAP data or China provincial data base (Zhang et al., 2012; Cu”
The role of globalization on the recent evolution of energy demand in India: Implications for sustainable development (2016, background): “Zhang et al. (2013) investigated the effect of domestic trade on regional energy demand using Chinese data.”
Impact of quota decline scheme of emission trading in China: A dynamic recursive CGE model (2018, background): “Zhang et al. (2013) [34] developed a computable general equilibrium (CGE) model with regional detail to assess current CO2 intensity targets and assess the impact of provincial CO2 emissions intensity targets under the Twelfth Five-Year Plan in China.”
Emissions trading in China: Progress and prospects (2014, background): “However, the prices are still below levels that researchers expect to be needed to achieve meaningful reductions consistent with the country's CO2 intensity target (Zhang et al., 2013; Tang and Wu, 2013; Gu et al., 2013).”