CLIMATE AND HEALTH BENEFITS OF PHASING OUT IRON & STEEL PRODUCTION CAPACITY IN CHINA: FINDINGS FROM THE IMED MODEL

Abstract

In recognition of the negative climate change and deteriorative air quality, the iron and steel industry in China was subject to production capacity phase-out policy (PCPP), which is deeply influencing industrial restructuring and national emission reduction targets. However, researches that quantitatively estimated the comprehensive impacts of such structural adjustment policy remain scant. For this purpose, this study expands and soft-links between GAINS and IMED models to characterize the impacts of climate change and PM[Formula: see text]-attributed health co-benefits. Results showed the PCPP based on scale limitation to eliminate backward capacities in the Beijing-Tianjin-Hebei region yields total benefits of 34.9 billion Yuan (4.2 billion USD), 89% of total coming from energy saving and carbon mitigation, more than policy costs (20.0 billion Yuan) in 2020, but the gap between benefit-cost will keep narrowing to [Formula: see text]2.8 billion Yuan ([Formula: see text]0.3 billion USD) in 2020–2030, indicating that policy improvement is needed in the long run. To further increase policy co-benefits and achieve multiple policy targets, the policymaker should readjust the PCPP by switching scale limitation to energy efficiency constraint. If doing that, the difference of benefit-cost will achieve 42.5 billion Yuan (5.1 billion USD). The regional disparity also exits due to the diverse ratio of benefit-cost in the selected provinces, calling for necessary fiscal incentives to the less developed area, e.g., Hebei, to promote closer integration.