Global warming policy, energy, and the Chinese economy

Abstract

China is the world's largest user of coal and therefore a major generator of greenhouse gases. This paper addresses the issue of whether the country can reconfigure its energy structure without hindering its future economic development. We construct a dynamic linear programming model of the Chinese economy and use it to simulate five alternative strategies to stabilize CO 2 emissions at 20% of projected year 2000 baseline levels. Our results, under more optimistic assumptions, indicate this goal can be achieved with no growth penalty. However, if major technological changes relating to energy conservation and coal displacement, as well as vastly increasing availabilities of clean fuels, are not forthcoming, China could suffer a significant decline in its rate of economic growth.