IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v18y2025i5p1029-d1595658.html
   My bibliography  Save this article

Exploring the Effects of Carbon Pricing and Carbon Quota Control on the Energy Transition Towards Carbon Neutrality: A Computable General Equilibrium Analysis of the Zhejiang Region of China

Author

Listed:
  • Bo Shi

    (Urban Institute and Department of Civil Engineering, Kyushu University, Fukuoka 819-0395, Japan
    These authors contributed equally to this work.)

  • Qiuhui Jiang

    (School of Public Affairs, Zhejiang University, Hangzhou 310058, China
    These authors contributed equally to this work.)

  • Minjun Shi

    (School of Public Affairs, Zhejiang University, Hangzhou 310058, China)

  • Shunsuke Managi

    (Urban Institute and Department of Civil Engineering, Kyushu University, Fukuoka 819-0395, Japan)

Abstract

The pathway towards carbon neutrality in regions with a relatively light industrial structure and scarce renewable energy resources presents a challenge when balancing energy efficiency improvements with the expansion of renewable energy. Therefore, this study investigates the effectiveness of carbon pricing and carbon quota control as regional carbon abatement policies. The findings demonstrate that carbon taxes are less effective than carbon emission quota control in economic growth and carbon abatement due to their weaker impact on energy efficiency enhancement and structural transition in the energy and industrial sectors. Moreover, stricter carbon pricing, determined by carbon emission goals, leads to greater reduction in sectoral carbon intensity but slower GDP growth caused by the accelerated decline of manufacturing and infrastructure industries compared to carbon intensity quota policies. In addition, carbon pricing derived from carbon emission and intensity quota policies increases reliance on domestically imported electricity, which is constrained by the availability of renewable energy resources.

Suggested Citation

  • Bo Shi & Qiuhui Jiang & Minjun Shi & Shunsuke Managi, 2025. "Exploring the Effects of Carbon Pricing and Carbon Quota Control on the Energy Transition Towards Carbon Neutrality: A Computable General Equilibrium Analysis of the Zhejiang Region of China," Energies, MDPI, vol. 18(5), pages 1-20, February.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:5:p:1029-:d:1595658
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/18/5/1029/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/18/5/1029/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rasmussen, Tobias N., 2001. "CO2 abatement policy with learning-by-doing in renewable energy," Resource and Energy Economics, Elsevier, vol. 23(4), pages 297-325, October.
    2. Bremer, Leon & den Nijs, Sacha & de Groot, Henri L.F., 2024. "The energy efficiency gap and barriers to investments: Evidence from a firm survey in The Netherlands," Energy Economics, Elsevier, vol. 133(C).
    3. Ge, Tao & Ding, Ziqi & Lu, Xiaoya & Yang, Keling, 2023. "Spillover effect of energy intensity targets on renewable energy consumption in China: A spatial econometric approach," Renewable Energy, Elsevier, vol. 217(C).
    4. Lin, Jiang & Xu Liu, & Gang He,, 2020. "Regional electricity demand and economic transition in China," Utilities Policy, Elsevier, vol. 64(C).
    5. Su, Yi & Fan, Qi-ming, 2022. "Renewable energy technology innovation, industrial structure upgrading and green development from the perspective of China's provinces," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    6. Naef, Alain, 2024. "The impossible love of fossil fuel companies for carbon taxes," Ecological Economics, Elsevier, vol. 217(C).
    7. Chen, Wei & Zou, Wandan & Zhong, Kaiyang & Aliyeva, Alina, 2023. "Machine learning assessment under the development of green technology innovation: A perspective of energy transition," Renewable Energy, Elsevier, vol. 214(C), pages 65-73.
    8. Kahrl, Fredrich & Williams, Jim & Jianhua, Ding & Junfeng, Hu, 2011. "Challenges to China's transition to a low carbon electricity system," Energy Policy, Elsevier, vol. 39(7), pages 4032-4041, July.
    9. Rempel, Arthur & Gupta, Joyeeta, 2021. "Fossil fuels, stranded assets and COVID-19: Imagining an inclusive & transformative recovery," World Development, Elsevier, vol. 146(C).
    10. Maha Mohamed Alsebai Mohamed & Pingfeng Liu & Guihua Nie, 2022. "Causality between Technological Innovation and Economic Growth: Evidence from the Economies of Developing Countries," Sustainability, MDPI, vol. 14(6), pages 1-39, March.
    11. Ozdemir, Ali Can, 2023. "Decomposition and decoupling analysis of carbon dioxide emissions in electricity generation by primary fossil fuels in Turkey," Energy, Elsevier, vol. 273(C).
    12. Muhammad, Sulaman & Pan, Yanchun & Agha, Mujtaba Hassan & Umar, Muhammad & Chen, Siyuan, 2022. "Industrial structure, energy intensity and environmental efficiency across developed and developing economies: The intermediary role of primary, secondary and tertiary industry," Energy, Elsevier, vol. 247(C).
    13. Nobuhiro Hosoe & Kenji Gasawa & Hideo Hashimoto, 2010. "Textbook of Computable General Equilibrium Modelling," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28165-3, December.
    14. Lin, Boqiang & Zhu, Penghu, 2021. "Has increasing block pricing policy been perceived in China? Evidence from residential electricity use," Energy Economics, Elsevier, vol. 94(C).
    15. Xu, Guangyue & Zang, Lanmei & Schwarz, Peter & Yang, Hualiu, 2023. "Achieving Chinaʼs carbon neutrality goal by economic growth rate adjustment and low-carbon energy structure," Energy Policy, Elsevier, vol. 183(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gbeminiyi John Oyewole & George Alex Thopil, 2025. "Industrial Electricity Pricing and Renewable Energy: A Temporal Analysis of the Effect of Taxes," Energies, MDPI, vol. 18(8), pages 1-25, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zi Hui Yin & Wei Ping Zeng, 2024. "Path to sustainable development: Can industrial intelligence and technological innovation balance economic growth and environmental quality in China?," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(5), pages 4486-4504, October.
    2. Yang, Guanglei & Zhang, Guoxing & Cao, Dongqin & Zha, Donglan & Gao, Xiulin & Su, Bin, 2024. "China's provincial-level sustainable energy transition requires accelerating renewable energy technological innovation," Energy, Elsevier, vol. 288(C).
    3. M. Alejandro Cardenete & M. Carmen Lima & Ferran Sancho, 2013. "Are There Key Sectors? An Appraisal Using Applied General Equilibrium," The Review of Regional Studies, Southern Regional Science Association, vol. 43(2,3), pages 111-129, Winter.
    4. Korrakot Phomsoda & Nattapong Puttanapong & Mongkut Piantanakulchai, 2021. "Economic Impacts of Thailand’s Biofuel Subsidy Reallocation Using a Dynamic Computable General Equilibrium (CGE) Model," Energies, MDPI, vol. 14(8), pages 1-21, April.
    5. Iqbal, Sajid & Zhang, Qingyu & Chang, Ming, 2025. "Turning waste to watts: studying tyre pyrolysis oil production supply for electricity generation and net-zero carbon emission with life cycle assessment approach," Energy, Elsevier, vol. 324(C).
    6. Bell, William Paul & Zheng, Xuemei, 2018. "Inclusive growth and climate change adaptation and mitigation in Australia and China : Removing barriers to solving wicked problems," MPRA Paper 84509, University Library of Munich, Germany.
    7. Li, Tianyu & Yue, Xiao-Guang & Waheed, Humayun & Yıldırım, Bilal, 2023. "Can energy efficiency and natural resources foster economic growth? Evidence from BRICS countries," Resources Policy, Elsevier, vol. 83(C).
    8. Salman, Muhammad & Long, Xingle & Wang, Guimei & Zha, Donglan, 2022. "Paris climate agreement and global environmental efficiency: New evidence from fuzzy regression discontinuity design," Energy Policy, Elsevier, vol. 168(C).
    9. Valentine, Scott Victor, 2014. "The socio-political economy of electricity generation in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 416-429.
    10. Fang, Shuya & Fang, Wei, 2023. "How fiscal decentralization and trade diversification influence sustainable development: Moderating role of resources dependency," Resources Policy, Elsevier, vol. 84(C).
    11. Hayashi, Daisuke & Huenteler, Joern & Lewis, Joanna I., 2018. "Gone with the wind: A learning curve analysis of China's wind power industry," Energy Policy, Elsevier, vol. 120(C), pages 38-51.
    12. Zhang, Yin-Fang & Gao, Ping, 2016. "Integrating environmental considerations into economic regulation of China's electricity sector," Utilities Policy, Elsevier, vol. 38(C), pages 62-71.
    13. Womeldorf, Carole A. & Chimeli, Ariaster B., 2014. "A computational fluid dynamics approach to wind prospecting: Lessons from the U.S. Appalachian region," Energy Policy, Elsevier, vol. 73(C), pages 645-653.
    14. Chishti, Muhammad Zubair & Xia, Xiqiang & Dogan, Eyup, 2025. "Corrigendum to “Understanding the effects of artificial intelligence on energy transition: The moderating role of Paris Agreement” [Energy Economics Volume 131, March 2024, 107388]," Energy Economics, Elsevier, vol. 142(C).
    15. Zhang, Sufang & Andrews-Speed, Philip & Li, Sitao, 2018. "To what extent will China's ongoing electricity market reforms assist the integration of renewable energy?," Energy Policy, Elsevier, vol. 114(C), pages 165-172.
    16. Ning Zhang & Jinhua Sun & Yu Tang & Jianqun Zhang & Valentina Boamah & Decai Tang & Xiaoxue Zhang, 2023. "How Do Green Finance and Green Technology Innovation Impact the Yangtze River Economic Belt’s Industrial Structure Upgrading in China? A Moderated Mediation Effect Model Based on Provincial Panel Data," Sustainability, MDPI, vol. 15(3), pages 1-22, January.
    17. Ramón E. Key-Hernández & Claudina Villarroel, 2014. "Domestic impact of production cuts in OPEC countries: The cases of Nigeria and Venezuela," EcoMod2014 7007, EcoMod.
    18. Dellink, Rob & van Ierland, Ekko, 2006. "Pollution abatement in the Netherlands: A dynamic applied general equilibrium assessment," Journal of Policy Modeling, Elsevier, vol. 28(2), pages 207-221, February.
    19. Ramón E. Key-Hernández & Claudina Villarroel, 2017. "Subsidies to the Energy Sector in Venezuela: the effects of their removal considering inter-fuel substitution," EcoMod2017 10422, EcoMod.
    20. Maru, Takeshi, 2016. "How Social Customs Restrict EU Accession Effects on Female Labor Participation in Agricultural Production in Rural Adana, Turkey: A Simulation Analysis," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 18.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:18:y:2025:i:5:p:1029-:d:1595658. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.