Improved renewable energy storage, clean electrification and carbon mitigation in China: Based on a CGE Analysis

Abstract

Although renewable energy (RE) has been developed technologically decades ago, urgent demand of clean electricity is subject to power storage due to intermittency of wind and solar power. This study develops a CGE model including RE generation and RE storage with induced technological change (ITC). Our study further analyzes the environmental and economic impacts of electrification and environmental policies on RE development and RE storage with ITC and the results are as follows: 1) a single carbon tax policy is not an appropriate instrument to pursue both environmental and economic gains against CO2 abatement and energy structural transition. 2) carbon tax with subsidy to RE storage is conducive to clean energy structural shift and economic growth in long term but it imposes slight negative impact on GDP in medium term. Furthermore, it cannot achieve 25% of non-fossil fuel consumption goal by 2030. 3) Single electrification will increase the electricity demand significantly, including both thermal and nonthermal power, thereby cause more carbon emission and GDP loss in short run. While LBD in RE and RE storage sector facilitated by electrification contributes to more GDP gain, carbon mitigation and non-fossil fuel consumption rate in long run compared to carbon tax and subsidy scenarios. 4) Electrification with carbon tax and subsidy to RE storage leads to greater CO2 mitigation and less subsidy to RE storage, better economic performance in CTSE compared to other scenarios, showing vital role of ITC in RE and power storage. 5) Promoting the LBD process is an efficient way to encourage RE development under electrification.