Analyzing the Regional Impact of a Fossil Energy Cap in China
Name
MITJPSPGC_Rpt237.pdf
Description
Main article
Size
1.73 MB
Format
Adobe PDF
Checksum (MD5)
9d4833dbff384ac1b44b18098b38006b
Author(s)
Zhang, D.
Karplus, V.
Rausch, S.
Zhang, X.
Date Issued
January 2013
Publisher
MIT Joint Program on the Science and Policy of Global Change
Citation
237
Series/Report no.
Joint Program Report Series;237
Abstract
Decoupling fossil energy demand from economic growth is crucial to China’s sustainable development. In addition to energy and carbon intensity targets enacted under the Twelfth Five-Year Plan (2011–2015), a coal or fossil energy cap is under discussion as a way to constrain the absolute quantity of energy used. Importantly, implementation of such a cap may be compatible with existing policies and institutions. We evaluate the efficiency and distributional implications of alternative energy cap designs using a numerical general equilibrium model of China’s economy, built on the 2007 regional input-output tables for China and the Global Trade Analysis Project global data set. We find that a national cap on fossil energy implemented through a tax on final energy products and an energy saving allowance trading market is the most costeffective design, while a regional coal-only cap is the least cost-effective design. We further find that a regional coal cap results in large welfare losses in some provinces. Capping fossil energy use at the national level is found to be nearly as cost effective as a national CO2 emissions target that penalizes energy use based on carbon content.
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