The Long-Term Impact of Carbon Border Adjustment Mechanism on China’s Power Supply and Demand and Environmental Benefits: An Analysis Based on the Computable General Equilibrium Model

Linfang Yan, Kaibin Weng, Heng Zhou, Di Zhu, Xingyang Zhu, Yong Zhou, Simeng Gao and Zhili Du ()
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Linfang Yan: State Grid (Suzhou) City & Energy Research Institute Co., Ltd., Suzhou 215163, China
Kaibin Weng: State Grid (Suzhou) City & Energy Research Institute Co., Ltd., Suzhou 215163, China
Heng Zhou: State Grid (Suzhou) City & Energy Research Institute Co., Ltd., Suzhou 215163, China
Di Zhu: State Grid (Suzhou) City & Energy Research Institute Co., Ltd., Suzhou 215163, China
Xingyang Zhu: State Grid (Suzhou) City & Energy Research Institute Co., Ltd., Suzhou 215163, China
Yong Zhou: State Grid (Suzhou) City & Energy Research Institute Co., Ltd., Suzhou 215163, China
Simeng Gao: School of Management, Xiamen University, Xiamen 361005, China
Zhili Du: School of Management, Xiamen University, Xiamen 361005, China

Energies, 2025, vol. 18, issue 18, 1-22

Abstract: In the process of responding to global climate change, carbon tariffs have attracted much attention as a new type of trade protection and environmental governance means. The European Union is a pioneer in global carbon tariff policies. Currently, there is no research system to assess the impact of the Carbon Border Adjustment Mechanism on China’s economic, energy and environmental development. Based on the dynamic computable general equilibrium model, this paper assesses the long-term impact of Carbon Border Adjustment Mechanism on China’s economic growth, power supply and demand, and environmental benefits. The research findings are as follows: (1) The implementation of Carbon Border Adjustment Mechanism has reduced China’s total GDP, especially when the free quota was completely abolished, which is when the decline was the greatest; The output of high energy-consuming industries such as steel and aluminum will also decrease simultaneously. (2) The implementation of Carbon Border Adjustment Mechanism has significantly increased the proportion of photovoltaic power generation, while reducing the electricity consumption of the manufacturing industry, accelerating the green transformation of China’s power generation structure. (3) Carbon Border Adjustment Mechanism has enabled China to reach its carbon peak earlier and lower the peak value, but the marginal cost of emission reduction is higher than that of existing carbon reduction measures. This research is of great significance for addressing the challenges of Carbon Border Adjustment Mechanism and promoting the low-carbon transformation of the economy.

Keywords: CBAM; power generation structure; electricity consumption; free quota; carbon emissions (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: 2025
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