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Can Technological Innovation Help China Take on Its Climate Responsibility? A Computable General Equilibrium Analysis

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  • Wei Jin

Abstract

This paper examines the effectiveness of China's indigenous R&D investment and technological innovation to curb its carbon emissions. The mechanism of endogenous technical change (TC) is incorporated an intertemporal computable general equilibrium (CGE) model. R&D investments and knowledge creations are modeled as the endogenous behaviors of private firms. The accumulated stocks of knowledge are applied in the production process to affect the rate and bias of TC. Simulation results show that: 1) While China's indigenous R&D efforts play a significant role to curb carbon emissions, sole dependence on R&D may be far from sufficient to achieve China's pledged Copenhagen climate target with complementary policies being required to reinforce existing climate actions; 2) Innovation policies including public R&D subsidy and stringent patenting system can help strengthen economy-wide R&D investment and further reduce emissions, but this complementary effect is still minor and insufficient to meet the stipulated emission cuts target; 3) Carbon taxation can create significant carbon-saving benefits and fulfill climate target, but this achievement is at the cost of economic losses. The induced technical improvement, however, can partially mitigate the deadweight loss incurred by carbon tax distortion.

Suggested Citation

  • Wei Jin, 2012. "Can Technological Innovation Help China Take on Its Climate Responsibility? A Computable General Equilibrium Analysis," CAMA Working Papers 2012-51, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2012-51
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    Cited by:

    1. Wei Jin & ZhongXiang Zhang, 2016. "China's pursuit of environmentally sustainable development: Harnessing the new engine of technological innovation," CCEP Working Papers 1601, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
    2. Wang, Changjian & Wang, Fei & Zhang, Xinlin & Yang, Yu & Su, Yongxian & Ye, Yuyao & Zhang, Hongou, 2017. "Examining the driving factors of energy related carbon emissions using the extended STIRPAT model based on IPAT identity in Xinjiang," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 51-61.
    3. Wei Jin & ZhongXiang Zhang, 2014. "From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy," Working Papers 2014.100, Fondazione Eni Enrico Mattei.
    4. Hübler, Michael & Voigt, Sebastian & Löschel, Andreas, 2014. "Designing an emissions trading scheme for China—An up-to-date climate policy assessment," Energy Policy, Elsevier, vol. 75(C), pages 57-72.
    5. Jin, Wei, 2016. "International technology diffusion, multilateral R&D coordination, and global climate mitigation," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 357-372.
    6. repec:eee:rensus:v:74:y:2017:i:c:p:299-315 is not listed on IDEAS

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