Abstract

The iron and steel industry is one of major sectors in term of energy consumption and CO2 emission in China. In this paper, we evaluate the reduction potential of CO2 emissions in China׳s iron and steel sector, based on the co-integration method and scenario design. We find that there is a long-term relationship between carbon intensity and its affecting factors, such as energy substitution, labor productivity, technology, and energy price. Monte Carlo simulation is further used for risk analysis. The results show that under BAU (business as usual) situation, the carbon intensity of China׳s iron and steel sector will be 0.3693t CO2/100 CNY by 2020. However, the reduction potential of CO2 emissions in 2020 will be 541.75 million tons and 856.68 million tons under the moderate carbon-reducing scenario and the advanced carbon-reducing scenario, respectively. Based on the results of the elasticities obtained in the long-term equilibrium equation, some policy recommendations for CO2 emissions reduction in China׳s iron and steel industry are suggested.

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