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Research on CO 2 Emission Reduction Mechanism of China’s Iron and Steel Industry under Various Emission Reduction Policies

Ye Duan (), Nan Li (), Hailin Mu () and Shusen Gui ()
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Ye Duan: Key Laboratory of Ocean Energy Utilization and Energy Conservation of Ministry of Education, Dalian University of Technology, Dalian 116024, China
Nan Li: Key Laboratory of Ocean Energy Utilization and Energy Conservation of Ministry of Education, Dalian University of Technology, Dalian 116024, China
Hailin Mu: Key Laboratory of Ocean Energy Utilization and Energy Conservation of Ministry of Education, Dalian University of Technology, Dalian 116024, China
Shusen Gui: Faculty of Management and Economics, Dalian University of Technology, Dalian 116024, China

Energies, 2017, vol. 10, issue 12, 1-24

Abstract: In this paper, a two-stage dynamic game model of China’s iron and steel industry is constructed. Carbon tax levy, product subsidy, carbon capture and sequestration (CCS) and other factors are included in the emission reduction mechanism. The effects of emissions reduction and the economic impact of China’s overall steel industry (and that of its six main regions) are investigated for the first time under different scenarios. As new findings, we report the following: (1) Not all factors declined. The overall social welfare, consumer surplus, output and emissions decrease with a gradual increase in the reduction target, whereas the carbon tax value, unit value of product subsidies and total subsidies show a rising trend; (2) A combination of multiple emissions reduction policies is more effective than a single policy. With the implementation of a combined policy, regional output polarization has eased; (3) Steel output does not exceed 950 million tons, far below the current peak. These results will help the industry to formulate reasonable emissions reduction and output targets. In short, in effort to eliminate industry poverty and to alleviate overcapacity, the industry should not only adopt the various coordinated reduction policies, but also fully consider regional differences and reduction needs.

Keywords: emission reduction mechanism research; China’s iron and steel industry; a two-stage dynamic game; inter-regional product yield selection (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2017
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