The rapid development of the photovoltaic industry in China and related carbon dioxide abatement costs

Abstract

There is a consensus within the international community that replacing traditional fossil energy with renewable energy, such as photovoltaic energy, will help mitigate climate change. However, the literature addressing the rapid development issues of the photovoltaic industry and related carbon dioxide abatement costs is limited. China is currently the largest photovoltaic producer and consumer in the world, hence suitable as our research object. In this paper, a fixed effect panel model with provincial panel data during the period 2012–2016 is applied to study the factors that influence China’s photovoltaic industry. The empirical results indicate that carbon dioxide emission mitigation requirements, government subsidies, technological progress, energy substitution, economic growth, and illumination resources promote the development of the photovoltaic industry. We further adapt the cost estimation model to estimate the average carbon dioxide abatement cost of photovoltaic electric power in China at 679.72 yuan/ton in 2015 and 681.88 yuan/ton in 2016. Compared with wind power and biomass energy, photovoltaic electric power is currently less economical for carbon dioxide emission reduction. Moreover, the future carbon dioxide abatement cost is predicted using a scenario analysis at 118.94–259.42 yuan/ton in 2025 and 42.63–171.95 yuan/ton in 2030. Since the carbon dioxide abatement cost in 2030 is in line with the future price level of the carbon trading market, it will be both economical and feasible to use photovoltaic electric power to decrease carbon dioxide emissions in the future.