Carbon tax to phase out coal as propylene feedstock and control upstream methane emissions in China: Based on dynamic radiative forcing

Abstract

Carbon tax is a policy instrument that facilitate the phase-out of coal as a chemical feedstock and help China achieve an early carbon peak. However, the policy design is challenged by the complex dynamics of global warming potentials (GWP) from upstream methane emissions, which have a short atmospheric lifetime but a high climate impact. In this study, we compared the life-cycle GWP of two propylene production routes in China: Coal-to-Olefin (CTO) and Propane Dehydrogenation (PDH). We also conducted a cost-profit analysis that incorporates the carbon tax, considering uncertainties in the dynamic radiative forcing of methane. We derived a range of optimal carbon tax rates that can enhance the economic competitiveness of low-carbon propylene routes PDH and discourage the expansion of coal-fed CTO propylene routes. Results show that, for the propylene sector in China, the carbon tax rate should be between 86 and 600 Chinese Yuan (CNY) or 12–84 US dollars (USD) per ton of carbon dioxide equivalent (CO2e), which corresponds to 1–10% of the typical propylene price in the Chinese market. Our study provides spatiotemporal insights into the carbon tax for China's propylene sector to decarbonize and control upstream methane emissions. Since propylene is one of the key raw materials for chemical (e.g., plastic) productions, our analysis contributes to the climate benefits of global chemical trade.