Abstract
Based on Hahn & Metcalfe (2021), we deduced the theoretical framework and calculated China's power distortion index (PDI) using the city-level industrial and residential power consumption and price data. We further studied the relationship between PDI and carbon emissions, and optimized the PDI under the carbon peaking target through scenario analysis. We find that: (1) China's PDI showed an inverted "U" shape between 2006 and 2019. (2) On average, one-unit decrease in PDI could result in a decrease of 3.72% in carbon emissions. (3) The scenario simulation indicates that to achieve the target PDI, the average industrial (residential) power price in 2030 needs to be reduced (increased) to 0.59 (0.58) yuan.
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