An economy-wide impacts of multiple mitigation pathways toward carbon neutrality in China: A CGE-based analysis

Abstract

The realisation of China's 2060 carbon neutrality will generate a fundamental transformation in the country's energy structure, or even economic structure. Thus, it is necessary to systematically assess different paths to carbon neutrality in China from an economy-wide perspective. Therefore, using a computable general equilibrium model, this study portrays a detailed electricity technology module to assess the macro-economic and environmental impacts of four abatement ways for achieving carbon neutrality. Results show that, first, subsidising renewable energy and carbon pricing is the relatively optimal way to achieve carbon neutrality. This approach only requires the lowest carbon price and causes the most negligible loss to GDP and household welfare. Moreover, it can also significantly improve the shares for renewable energy as well as electrification, and provides the best co-benefits of abated SO2 and NOX. Second, subsidising CCS combined with carbon pricing is the least advantageous way, with the largest GDP and household welfare loss; furthermore, it has relatively weak promotion effects on energy and environment indicators. Third, if adopting subsidised renewable energy and carbon pricing could eliminate the need for separate abatement measures for SO2 and NOX; and if CCS subsidies and carbon pricing are combined, policy efforts for pollutants can be significantly weakened.