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Regional Opportunities for China to Go Low-Carbon: Results from the REEC Model

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  • Hongbo Duan
  • Lei Zhu
  • Gürkan KumbaroÄŸlu
  • Ying Fan

Abstract

The intention of this paper is to (i) introduce a multi-regional dynamic emissions trading model and (ii) examine the potential impact of an emissions trading scheme (ETS) on the long-term evolution of energy technologies from national and regional perspectives in China. The establishment of this model is a salutary attempt to Sinicize the global integrated assessment model that combines economy, energy, and environment systems. The simulation results indicate that: (1) for majority of regions, ETS is more effective in cutting CO2 emissions than a harmonized carbon tax (HCT), but this might not be true for the entire country, which means that these two options have little difference in overall carbon reduction; (2) carbon tax policy is a more cost-effective option in curbing CO2 with respect to ETS in the long run; (3) neither ETS nor pure carbon tax provide enough incentives for the breakthrough of carbon-free energy technologies, which illustrates that matching with some other support policies, such as subsidies and R&D investment, is essential to extend the niche market; and (4) In the context of ETS, the diffusion of non-fossil technologies in regions that act as sellers performs much better than this diffusion in the buyer regions.

Suggested Citation

  • Hongbo Duan & Lei Zhu & Gürkan KumbaroÄŸlu & Ying Fan, 2016. "Regional Opportunities for China to Go Low-Carbon: Results from the REEC Model," The Energy Journal, , vol. 37(1_suppl), pages 223-252, January.
    • Handle: RePEc:sae:enejou:v:37:y:2016:i:1_suppl:p:223-252
    DOI: 10.5547/01956574.37.SI1.hdua
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