Economic and employment effects of China's power transition based on input‒output and scenario simulation

Abstract

With high carbon emission, the low-carbon transition of power sector will be critical for China to achieve the carbon peaking and carbon neutrality goals. The power transition will have an impact on the economy and employment through the value chain. Quantifying the impact is important for China's future energy and welfare policies. This study adopts input‒output model to analyze the impact on economy and employment based on accelerated and slow power transition scenarios. The results show that the low-carbon power transition will have a negative impact on coal power and coal mining and washing sectors, while a positive impact on machine manufacturing and equipment sector. Low-carbon power transition will have a positive economic and employment effect to promote inclusive growth. By 2060, economic output will increase by about 8.50 trillion CNY, value-added by about 3.39 trillion CNY, and employment will increase by about 3.74 million. Although slower coal power transition can stabilize the economic and employment effect in the short and medium run, accelerating the power transition will produce more positive effect and lower job losses by coal power in the long run. By 2060, accelerating transition will boost output by 8.21%, value-added by 8.20% and jobs by 7.97%. Accordingly, the government should establish an all-round just low-carbon transition mechanism.