- Policy impacts are as diverse as China’s provinces
The effects of policy vary widely across China’s provinces, consistent with diverse features of provincial energy systems and economies. Focusing on the 4% scenario, CO₂ emissions are reduced in the parts of the economy where they cost least. These parts of the economy tend to be concentrated in the rapidly industrializing central provinces, which have large populations and rely economically on extractive and energy-intensive industries. These areas have largely not achieved the technological level and relatively higher efficiencies of energy systems in the coastal provinces.
- Coal production in provincial GDP is one strong predictor of CO₂ reduction
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Each province faces a different marginal cost of reducing CO₂. A CO₂ price induces provinces with low cost abatement opportunities to reduce CO₂ and avoid the charge, while high abatement cost producers will continue to emit and pay the charge instead. Nationally, among CO₂-intensive fuels demand for coal falls most as there are a range of substitutes for its use. This significantly impacts major coal producing and domestic exporting provinces such as Shanxi (dark blue in the right panel).