The Boundary of Porter Hypothesis: The Energy and Economic Impact of China’s Carbon Neutrality Target in 2060

Shenhai Huang, Chao Du, Xian Jin, Daini Zhang, Shiyan Wen (), Yu’an Wang, Zhenyu Cheng and Zhijie Jia
Additional contact information
Shenhai Huang: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Chao Du: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Xian Jin: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Daini Zhang: Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
Shiyan Wen: School of Economics, Xi’an University of Finance and Economics, Xi’an 710003, China
Yu’an Wang: School of Applied Economics, Renmin University of China, Beijing 100872, China
Zhenyu Cheng: Shandong Academy of Social Sciences, Jinan 250000, China

Energies, 2022, vol. 15, issue 23, 1-18

Abstract: The process of carbon neutrality does have economic costs; however, few studies have measured the cost and the economic neutral opportunities. This paper uses a dynamic computable general equilibrium (CGE) model to simulate China’s carbon neutrality path from 2020 to 2060 and analyzes its economic impact. This paper innovatively adjusts the CGE modeling technology and simulates the boundary of the Porter hypothesis on the premise of economic neutrality. The results show that the carbon neutrality target may reduce the annual GDP growth rate by about 0.8% in 2020–2060. To make the carbon pricing method under the carbon neutrality framework meet the strong version of the Porter hypothesis (or economic neutrality), China must increase its annual total factor productivity by 0.56–0.57% in 2020–2060; this is hard to achieve. In addition, the study finds that China’s 2030 carbon target has little impact on the economy, but the achievement of the 2060 carbon neutrality target will have a significant effect. Therefore, the paper believes that the key to carbon neutrality lies in the coexistence of technological innovation and carbon pricing to ensure that we can cope with global warming with the lowest cost and resistance.

Keywords: carbon neutrality; China; economic impact; computable general equilibrium model; carbon tax; carbon emission trading scheme (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: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/1996-1073/15/23/9162/pdf (application/pdf)
https://www.mdpi.com/1996-1073/15/23/9162/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:15:y:2022:i:23:p:9162-:d:992098

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().