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The design of renewable support schemes and CO2 emissions in China

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  • Wu, Jie
  • Albrecht, Johan
  • Fan, Ying
  • Xia, Yan

Abstract

The renewable energy targets put forward by the Chinese government need comprehensive incentive schemes. This paper uses a multi-regional CGE model to evaluate two types of renewable support schemes; a subsidy scheme like a feed-in tariff (FIT) with a direct price impact for final consumers and a subsidy scheme without any price impact. We assess the CO2 consequences of both approaches, as well as their impact on economic activity in terms of GDP, industrial structure, electricity generation structure, and regional final demand elasticities of electricity. We find that a support scheme with price impact is much more effective in reducing CO2 emissions while the difference in GDP between the two policies is small. We estimate that the price implications of the support scheme allow for an additional emissions reduction of 113 Mt CO2—or 0.07% of total emissions—in China during 2020–2035. The support scheme with a price impact does not lead to a negative impact on the Chinese economy although there are significant differences among regions. In addition, while the whole country faces an approximately unitary electricity elasticity demand, we find significant differences in electricity demand elasticities among Chinese regions.

Suggested Citation

  • Wu, Jie & Albrecht, Johan & Fan, Ying & Xia, Yan, 2016. "The design of renewable support schemes and CO2 emissions in China," Energy Policy, Elsevier, vol. 99(C), pages 4-11.
    • Handle: RePEc:eee:enepol:v:99:y:2016:i:c:p:4-11
    DOI: 10.1016/j.enpol.2016.09.045
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    3. Wei, Weixian & Zhao, Yurong & Wang, Jianlin & Song, Malin, 2019. "The environmental benefits and economic impacts of Fit-in-Tariff in China," Renewable Energy, Elsevier, vol. 133(C), pages 401-410.
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    5. Jie Wu & Ying Fan & Yan Xia, 2017. "How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?," Energies, MDPI, vol. 10(8), pages 1-20, August.
    6. Yuan, Rong & Rodrigues, João F.D. & Tukker, Arnold & Behrens, Paul, 2018. "The impact of the expansion in non-fossil electricity infrastructure on China’s carbon emissions," Applied Energy, Elsevier, vol. 228(C), pages 1994-2008.
    7. Wenyang Huang & Huiwen Wang & Yigang Wei, 2018. "Endogenous or Exogenous? Examining Trans-Boundary Air Pollution by Using the Air Quality Index (AQI): A Case Study of 30 Provinces and Autonomous Regions in China," Sustainability, MDPI, vol. 10(11), pages 1-20, November.
    8. Liang, Yuanyuan & Yu, Biying & Wang, Lu, 2019. "Costs and benefits of renewable energy development in China's power industry," Renewable Energy, Elsevier, vol. 131(C), pages 700-712.
    9. Yuehong Lu & Zafar A. Khan & Manuel S. Alvarez-Alvarado & Yang Zhang & Zhijia Huang & Muhammad Imran, 2020. "A Critical Review of Sustainable Energy Policies for the Promotion of Renewable Energy Sources," Sustainability, MDPI, vol. 12(12), pages 1-31, June.
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    11. Demetriou, E. & Hadjistassou, C., 2021. "Can China decarbonize its electricity sector?," Energy Policy, Elsevier, vol. 148(PB).

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