Possible carbon circular pathway exploration for oil transition under the consideration of energy supply constraint and uncertainty

Chuxiao Yang, Haitao Wu (), Yunxia Guo and Yu Hao

Ecological Economics, 2024, vol. 222, issue C

Abstract: Addressing how to achieve carbon neutrality without hindering economic growth is critical. As the world's largest CO2 emitter and heavily reliant on imported crude oil, China faces challenges in shifting toward new energy sources to meet its 2060 carbon neutrality goal. This study introduces a novel decarbonized pathway for on-road fuel, considering economic and technological uncertainties. Our analysis reveals that achieving the 2060 target is improbable with the current energy structure trends, highlighting a potential energy crisis due to a growing oil demand gap. We assess the cost and economic feasibility of this new pathway compared to three major carbon neutrality approaches, finding that carbon substitution and capture pathways encounter significant sustainable development challenges. Our pathway suggests transferring and absorbing 20–25 Gt of CO2 from concentrated emission sources, offering a sustainable alternative by potentially reducing CO2 emissions by over 20–25 Gt through carbon circulation. This approach presents an economically viable solution, minimizing opposition from fossil fuel sectors. For a smooth oil sector transition to carbon neutrality, China needs stronger emission reduction policies and should enhance the new carbon‑hydrogen fuel's competitiveness through subsidies, both technologically and economically.

Keywords: Sustainable development; Carbon cycle; Carbon neutrality; Energy structure change; DSGE (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:222:y:2024:i:c:s0921800924001216

DOI: 10.1016/j.ecolecon.2024.108224

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