Leveraging the transport sector to mitigate long-term climate policy costs in China: a behavioural perspective

Abstract

ABSTRACT High transition costs remain a major barrier to deeply decarbonizing sectors such as transport in many developing countries. Choice of mode and complementary policies are critical to shaping the costs of climate mitigation in the transport sector. This paper investigates the potentials offered by combined technological and behavioural changes stimulated by strategic infrastructure deployment that can facilitate decarbonization of transport in China. Our study is carried out using IMACLIM-R, a state-of-the-art integrated assessment model, which includes a detailed representation of transport dynamics by incorporating the behavioural determinants of mobility in a standard transport modelling framework. More specifically, this behavioural representation considers (i) the spatial organization of residential dwellings and industrial production, (ii) modal shift induced by transport infrastructure deployment and (iii) the intensity of freight transport production and distribution processes. It is found that supplementing carbon pricing with behavioural measures and a decoupling of economic activity from mobility needs can efficiently promote a modal shift towards low-carbon transport modes and reallocate the sectoral distribution of mitigation efforts. This in turn would significantly reduce the macro-economic impacts of deeply decarbonizing Chinese transport activities over the next decades. Complementary policies should focus on infrastructure, fiscal incentives, land-use, building regulations and other policies affecting the ways urban activities are distributed within the city’s boundary, along with industrial policies and other regulations that affect where firms choose to locate. Key policy insights To decarbonize China’s transport sector an integrated approach is needed due to strong inertia and distributional effects. Complementary policies have to focus on transport infrastructure, fiscal incentives, land-use and building regulations, as well as spatial organization. Transport-related climate policies interconnect with the ways in which urban activities are distributed within the city’s boundary, but also with industrial policies and other regulations that affect where firms choose to locate. A suite of policy instruments is required, including larger institutional incentives and greater financial leverage supporting innovations in the transport sector.