Development of a Low Carbon Economy in Wuxi City

Abstract

The development of a Low Carbon Economy is a vital instrument to encounter climate change and take into account the growing challenges of an increasing urbanization in China. Wuxi City in East China’s Jiangsu Province is starting to implement a Low Carbon City Plan for safeguarding a sustainable development of the city until 2020 and beyond. This paper aims at estimating the impact of the Low Carbon City plan for Wuxi’s energy demand and CO2-emissions until 2050. Using an econometric energy supply and demand model to estimate and forecast the Wuxi energy and CO2-balance aggregates until 2050, it compares a scenario without specific Low Carbon City measures to reduce sectoral CO2-intensities to a Low Carbon scenario implementing these measures according to the Low Carbon City Plan until 2020 and beyond. The decomposition of the Kaya-identity reveals that the increase of per capita income has the largest impact on the growth of CO2-emissions and the decrease of energy intensity of Gross Value Added the largest impact on the reduction of CO2-emissions in Wuxi. A decrease of population and CO2-intensity of Primary energy supply only have average contributions. The decrease of energy intensity of Gross Value Added is due to energy efficiency gains in the single economic sectors, but to a large extent due to structural changes of the economy away from energy intensive sectors such as iron and steel, chemical industry or cement industry towards the energy extensive service sectors. A growing residential sector also reduces the industrial share of energy demand. Only following the assumed national trend with a shift from CO2-intensive industries to a CO2-extensive service economy, the Low Carbon goal of a 50% reduction of CO2-intensity of Gross Value Added compared to 2005 cannot be reached in Wuxi. Specific sectoral CO2 -intensity goals have to be successfully observed by the economic sectors in Wuxi, especially by the industry. The promotion of combined heat and power generation also has to contribute to the specific activities in Wuxi.