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The Future of Natural Gas in China: Effects of Pricing Reform and Climate Policy

Author(s)
Zhang, Danwei; Paltsev, Sergey
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Abstract
China is currently attempting to reduce greenhouse gas emissions and increase natural gas consumption as a part of broader national strategies to reduce the air pollution impacts of the nation’s energy system. To assess the scenarios of natural gas development up to 2050, we employ a global energy-economic model—the MIT Economic Projection and Policy Analysis (EPPA) model. The results show that a cap-and-trade policy will enable China to achieve its climate mitigation goals, but will also reduce natural gas consumption. An integrated policy that uses a part of the carbon revenue obtained from the cap-and-trade system to subsidize natural gas use promotes natural gas consumption, resulting in a further reduction in coal use relative to the cap-and-trade policy case. The integrated policy has a very moderate welfare cost; however, it reduces air pollution and allows China to achieve both the climate objective and the natural gas promotion objective.
Date issued
2016-03
URI
http://hdl.handle.net/1721.1/103778
Publisher
MIT Joint Program on the Science and Policy of Global Change
Citation
Report 294
Series/Report no.
MIT Joint Program Report Series;294

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