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CLIMATE AND HEALTH BENEFITS OF PHASING OUT IRON & STEEL PRODUCTION CAPACITY IN CHINA: FINDINGS FROM THE IMED MODEL

Bo-Shu Li, Yan Chen, Shaohui Zhang, Zheru Wu, Janusz Cofala and Hancheng Dai
Additional contact information
Bo-Shu Li: College of Environmental Sciences and Engineering, Peking University, 5 Yiheyuan Road, Beijing 100871, P. R. China
Yan Chen: #x2020;Chinese Academy of Environmental Planning (CAEP), 8 Dayangfang BeiYuan Road, Beijing 100012, P. R. China
Shaohui Zhang: #x2021;School of Economics and Management, Beihang University, 37 Xueyuan Road, Beijing 100083, P. R. China§International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361 Laxenburg, Austria
Zheru Wu: #xB6;International Economic and Technical Cooperation and Exchange Center, Ministry of Water Resources, Plaza A, Yuyuantan South Road, Haidian District, Beijing, P. R. China
Janusz Cofala: #xA7;International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361 Laxenburg, Austria
Hancheng Dai: College of Environmental Sciences and Engineering, Peking University, 5 Yiheyuan Road, Beijing 100871, P. R. China

Climate Change Economics (CCE), 2020, vol. 11, issue 03, 1-32

Abstract: In recognition of the negative climate change and deteriorative air quality, the iron and steel industry in China was subject to production capacity phase-out policy (PCPP), which is deeply influencing industrial restructuring and national emission reduction targets. However, researches that quantitatively estimated the comprehensive impacts of such structural adjustment policy remain scant. For this purpose, this study expands and soft-links between GAINS and IMED models to characterize the impacts of climate change and PM2.5-attributed health co-benefits. Results showed the PCPP based on scale limitation to eliminate backward capacities in the Beijing-Tianjin-Hebei region yields total benefits of 34.9 billion Yuan (4.2 billion USD), 89% of total coming from energy saving and carbon mitigation, more than policy costs (20.0 billion Yuan) in 2020, but the gap between benefit-cost will keep narrowing to −2.8 billion Yuan (−0.3 billion USD) in 2020–2030, indicating that policy improvement is needed in the long run. To further increase policy co-benefits and achieve multiple policy targets, the policymaker should readjust the PCPP by switching scale limitation to energy efficiency constraint. If doing that, the difference of benefit-cost will achieve 42.5 billion Yuan (5.1 billion USD). The regional disparity also exits due to the diverse ratio of benefit-cost in the selected provinces, calling for necessary fiscal incentives to the less developed area, e.g., Hebei, to promote closer integration.

Keywords: Production capacity phase-out policy; health impact assessment; co-benefits analysis; iron and steel industry; Beijing-Tianjin-Hebei region in China; IMED model (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S2010007820410080

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