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The economic impact of a deep decarbonisation pathway for China: a hybrid model analysis through bottom-up and top-down linking

Author

Listed:
  • Xin Su

    (Tsinghua University)

  • Frédéric Ghersi

    (CIRED - Centre International de Recherche Sur L’Environnement Et Le Développement’
    CNRS - Centre National de La Recherche Scientifique)

  • Fei Teng

    (Tsinghua University)

  • Gaëlle Treut

    (CIRED - Centre International de Recherche Sur L’Environnement Et Le Développement’)

  • Meicong Liang

    (Tsinghua University)

Abstract

The development of mid-century low-emission development strategies is critical to guiding national actions on long-term mitigation. One of the key concerns in developing mitigation strategies is the cost of the low-carbon transition. In this study, we estimate the macroeconomic cost of a deep decarbonisation pathway for China, by integrating an energy-systems optimisation model with an economic model through hard linking. Our results indicate that deep decarbonisation increases the energy expenses of Chinese households in the mid-run due to the higher cost of electricity. However, firms will benefit from moderate decarbonisation as a result of a reduction in coal and oil consumption. As a result, energy-efficiency improvements lead to a reduction in firms’ total energy costs, partially compensating the crowding-out effect of low-carbon investments on general productive capital. Our mitigation scenario has therefore a small macroeconomic cost compared to business as usual, equal to a lag in the growth of less than one year in 2050.

Suggested Citation

  • Xin Su & Frédéric Ghersi & Fei Teng & Gaëlle Treut & Meicong Liang, 2022. "The economic impact of a deep decarbonisation pathway for China: a hybrid model analysis through bottom-up and top-down linking," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(1), pages 1-37, January.
    • Handle: RePEc:spr:masfgc:v:27:y:2022:i:1:d:10.1007_s11027-021-09979-w
    DOI: 10.1007/s11027-021-09979-w
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