The economic impact of a deep decarbonisation pathway for China: a hybrid model analysis through bottom-up and top-down linking

Xin Su, Frédéric Ghersi (), Fei Teng, Gaëlle Le Treut and Meicong Liang
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Frédéric Ghersi: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique

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Abstract: Designing mid-century low-emission development strategies is crucial to guiding long-term mitigation pathways at national levels. The cost of low-carbon transition is one of the key concerns in deep decarbonisation pathways (DDPs). In this study, we estimate the macroeconomic cost of a deep decarbonisation pathway for China, by integrating an energysystems optimization model with an economic model through hard linking. Our results show that deep decarbonisation increases the energy expenses of households in the mid-run through, especially, the higher cost of power and its substitution to coal; but not those of firms, who benefit from lower coal prices caused by the reduction of coal demand and reduce costly oil products consumptions early on. Energy-efficiency improvements therefore lead to a decrease of firms' total energy costs, which allows partially compensating the crowding-out effect of low-carbon investment on general productive capital. Compared to business-as-usual, our DDP 2 scenario consequently comes at a small macroeconomic cost, equal to a lag of less than one year of growth in 2050.

Keywords: Hybrid energy-economy model China deep decarbonisation pathways mitigation; Hybrid energy-economy model; China; deep decarbonisation pathways; mitigation (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-cna, nep-ene and nep-env
Note: View the original document on HAL open archive server: https://hal.science/hal-03897206v1
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Published in Mitigation and Adaptation Strategies for Global Change, 2022, 27 (1), pp.11. ⟨10.1007/s11027-021-09979-w⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03897206

DOI: 10.1007/s11027-021-09979-w

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