Green growth: The economic impacts of large-scale renewable energy development in China

Abstract

This study assesses the economic impacts and environmental co-benefits of large-scale development of renewable energy (RE) in China toward 2050 using a dynamic computable general equilibrium (CGE) model with distinguished improvements in the power sector. Two scenarios are constructed: a reference scenario assuming conventional development of RE and an REmax scenario assuming large-scale RE development by tapping China’s RE potential. The results show that large-scale RE development would not incur a significant macroeconomic cost. On the contrary, it would have significant green growth effects that benefit the growth of upstream industries, reshape the energy structure, and bring substantial environmental co-benefits. If the share of RE reaches 56% in the total primary energy in 2050, then non-fossil power sectors will become a mainstay industry with value added accounting for 3.4% of the GDP, a share comparable to other sectors such as agriculture (2.5%), iron and steel (3.3%), and construction (2.1%). In RE max scenario, the large scale RE development will stimulate the output worth of $1.18 trillion from other RE related upstream industries and create 4.12 million jobs in 2050. In addition to economic benefits, it could substantially reduce the emissions of CO2 and air pollutants such as NOx, SO2.