The Impacts of Reducing Renewable Energy Subsidies on China's Energy Transition by Using a Hybrid Dynamic Computable General Equilibrium Model

Zhengquan Guo,Haonan Zhang,Xingping Zhang,Sida Feng

doi:10.3389/fenrg.2020.00025

Abstract

This paper develops a hybrid computable general equilibrium model to explore the impacts of reducing renewable energy subsidies on China's energy transition in various scenarios. The results of the benchmark scenario indicate that China can realize its regulatory goals in energy consumption and structure, and carbon emissions intensity in 2030. This paper sets various policy scenarios to simulate the impacts of reducing renewable subsidies between 2021 and 2030. The analytical results of the scenarios indicate that the government's 2030 target for total energy and natural gas consumption and carbon emissions intensity can be achieved. However, the target for non–fossil energy is hard to fulfill when the renewable energy subsidy is reduced. The empirical results also indicate that a moderate renewable energy subsidy associated with significant technical progress in renewable energy is a crucial way for China to fulfill government targets and energy transition in 2030.

Highlights

In recent years, under the challenge of environmental degradation and climate change, the global renewable energy has made great progress with the strong support of government policies (Ji et al, 2019; Xu et al, 2019; Zhang and Ji, 2019)
According to a document issued by the Chinese National Development and Reform Commission (NDRC), China’s Intended Nationally Determined Contributions (INDC), China pledged to a target around 2030 or earlier of a peak in carbon emissions and a decline in carbon emission intensity by 60–65% compared with the level in 2005
To achieve the non-fossil fuel energy target in 2030, we raise the technical progress in wind and solar power in policy scenario 5, enabling them to significantly increase compared with scenario 4

Summary

Introduction

Under the challenge of environmental degradation and climate change, the global renewable energy has made great progress with the strong support of government policies (Ji et al, 2019; Xu et al, 2019; Zhang and Ji, 2019). In order to effectively promote the development of renewable energy, such as wind power and solar power, China has established a complete policy support system for renewable energy (Ji and Zhang, 2019). The added-value tax is levied by half, and the enterprise income tax is exempted from the first year to the third year and is halved from the fourth year to the sixth year when the projects of wind and solar power receive income. Those policies have effectively improved the economic benefits of wind and solar power enterprises and broaden renewable energy prospects in China.

Methods

Results

Discussion

Conclusion