The energy and CO2 emissions impact of renewable energy development in China

Abstract

China has adopted targets for developing renewable electricity that would require expansion on an unprecedented scale. During the period from 2010 to 2020, we find that current renewable electricity targets result in significant additional renewable energy installation and a reduction in cumulative CO2 emissions of 1.8% relative to a No Policy baseline. After 2020, the role of renewables is sensitive to both economic growth and technology cost assumptions. Importantly, we find that the CO2 emissions reductions due to increased renewables are offset in each year by emissions increases in non-covered sectors through 2050. We consider sensitivity to renewable electricity cost after 2020 and find that if cost falls due to policy or other reasons, renewable electricity share increases and results in slightly higher economic growth through 2050. However, regardless of the cost assumption, projected CO2 emissions reductions are very modest under a policy that only targets the supply side in the electricity sector. A policy approach that covers all sectors and allows flexibility to reduce CO2 at lowest cost – such as an emissions trading system – will prevent this emissions leakage and ensure targeted reductions in CO2 emissions are achieved over the long term.