Research on CO2 Emission Reduction Mechanism of China’s Iron and Steel Industry under Various Emission Reduction Policies

Ye Duan,Hailin Mu,Shusen Gui,Nan Li

doi:10.3390/en10122026

Abstract

In this paper, a two-stage dynamic game model of China’s iron and steel industry is constructed. Carbon tax levy, product subsidy, carbon capture and sequestration (CCS) and other factors are included in the emission reduction mechanism. The effects of emissions reduction and the economic impact of China’s overall steel industry (and that of its six main regions) are investigated for the first time under different scenarios. As new findings, we report the following: (1) Not all factors declined. The overall social welfare, consumer surplus, output and emissions decrease with a gradual increase in the reduction target, whereas the carbon tax value, unit value of product subsidies and total subsidies show a rising trend; (2) A combination of multiple emissions reduction policies is more effective than a single policy. With the implementation of a combined policy, regional output polarization has eased; (3) Steel output does not exceed 950 million tons, far below the current peak. These results will help the industry to formulate reasonable emissions reduction and output targets. In short, in effort to eliminate industry poverty and to alleviate overcapacity, the industry should not only adopt the various coordinated reduction policies, but also fully consider regional differences and reduction needs.

Highlights

China has established the world’s most complete iron and steel industry chain system, which provides most the iron and steel materials for the national economy [1]
According to the regional division of China, China is divided into six regions: North China (i.e., Beijing, Tianjin, Hebei, Shanxi, and Inner Mongolia), Northeast China (i.e., Liaoning, Jilin, and Heilongjiang), East China (i.e., Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, and Shandong), South Central China (i.e., Henan, Hubei, Hunan, Guangdong, Guangxi, and Hainan), Southwest China (i.e., Chongqing, Sichuan, Guizhou, Yunnan, and Tibet), Northwest China (i.e., Shanxi, Gansu, Qinghai, Ningxia, and Xinjiang)
The main research focus of this paper includes the government and the above six regions, the regional steel industry data is regarded as a steel enterprise entity)

Summary

Introduction

China has established the world’s most complete iron and steel industry chain system, which provides most the iron and steel materials for the national economy [1]. In 2011, the output was 850 million tons and in 2015 it equaled 1.02 billion tons, after reaching a historical peak of 1.046 billion tons in 2014. The domestic market share of steel is over 99%, effectively satisfying national economic and social development. The iron and steel industry faces non-neglected problems, especially the overcapacity. In 2015, China’s steel production capacity reached 1.13 billion tons, far exceeding its 1.02 billion tons of actual production. Steel production capacity has gradually shifted from regional, structural surplus to absolute excess. The concentration degree has ceased to rise, and the first 10 iron and steel enterprises’

Methods

Discussion

Conclusion