Modelling the socio-economic impacts of coal-fired electricity phaseout under carbon neutrality target: A dynamic CGE-based study of China

Abstract

Given its significant carbon emissions, the phaseout of coal-fired electricity emerges as a crucial strategy in achieving the goal of carbon neutrality, which will fundamentally reshape China's social-economic landscape. In this study, a dynamic computable general equilibrium (CGE) model was constructed to evaluate the economic and social ramifications of phasing out coal-fired electricity, encompassing diverse pathway scenarios. The results suggest that the phaseout of coal-fired electricity will significantly influence the socio-economic system compared to the Business as Usual (BAU) scenario. Different phaseout scenarios are projected to yield a cumulative decrease in carbon dioxide emissions ranging from 36.38 to 60.15 Gt between 2020 and 2060. Consequently, there will be a cumulative GDP ranging from 22.22 to 36.29 trillion yuan, accompanied by a cumulative decline in employment affecting 23.68 to 29.92 million individuals. The anticipated trends in annual GDP and job losses are expected to exhibit a U-shaped curve, initially increasing, and then decreasing from 2020 to 2060 compared to the BAU scenario. A distinct trade-off is anticipated to arise between the potential for carbon reduction and the resultant losses in jobs and economic output. The more optimistic scenario, characterized by a lower peak value, an earlier peak time, and a later phaseout time, is projected to result in a relatively lower socioeconomic impact per unit of CO2 emissions reduction. These findings provide policymakers with vital insights, informing the development of strategies for a gradual transition away from coal-fired electricity while minimizing socio-economic repercussions.