CECP - Exploring regional impacts of climate policy in China

China’s Climate Pledge

China’s climate pledge aims to halt the rise in the nation's CO₂ emissions trajectory at latest by 2030, and increase the share of non-fossil energy in the primary energy mix to 20% by the same year, targeting an overall reduction in CO₂ intensity of 60–65% in 2030, relative to the 2005 level. This reduction goal is equivalent to a roughly 4%/year decline in CO₂ intensity from 2015–2030.

Our Goal

Our goal in this analysis is to develop intuition about the national and provincial impact of alternative levels of climate policy stringency in China. We project and compare outcomes under increasingly stringent national CO₂ intensity reduction targets. CO₂ emissions reductions are achieved with a CO₂ price that incentivizes deployment of abatement options available in the model that meet the CO₂ intensity constraint at least cost. We compare all policy scenarios to a No Policy counterfactual, which assumes that no climate policy is in place after 2015. We use the No Policy scenario as a benchmark to assess the implications of a CO₂ price that achieves increasingly stringent annual reductions in CO₂ intensity, as follows:

No Policy counterfactual

In the No Policy counterfactual, the Chinese economy grows at 7/% per year in 2015, and the growth rate is assumed to gradually show down to 4.5/% per year in 2030.

3% Policy scenario

Carbon intensity falls by 3%/year from 2015 to 2030, starting in 2015. This scenario is consistent with China’s previous declared level of CO₂ intensity reduction effort under the 2009 Copenhagen climate pledge, which was to reduce national CO₂ intensity by 40-45% between 2005 and 2020 (does not include the non-fossil primary energy target). In reality, China’s CO₂ emissions intensity reduction has exceeded 3%/year from 2010 to 2015.

4% Policy scenario

Carbon intensity falls by 4%/year from 2015 to 2030, starting in 2015. This scenario is consistent with China’s current pledge under the 2015 Paris Climate Agreement.

5% Policy scenario

Carbon intensity falls by 5%/year from 2015 to 2030, starting in 2015. This scenario is more aggressive than China’s current pledge. By 2030, China’s CO₂ intensity approaches the global 2007 average.

The CO₂ price rises under each constraint, with steeper increases required to achieve more stringent CO₂ intensity targets. In all scenarios, economic growth follows a rising path, consistent with China's stated goal to become a well-off society by 2050.

Modeling Framework

In this analysis, we employ the Regional Emissions Air Quality Climate and Health (REACH) modeling framework, which combines the CECP-developed China Regional Energy Model (C-REM) with the latest available air pollutant emissions inventory for China and a state-of-the art atmospheric chemistry model (GEOS-Chem). The C-REM is a global energy-economic model with sub-national detail for China that is calibrated to actual provincial data for 2007, 2010, and 2015, and used to project to 2030. Trade is represented between China and the rest of the world, which is grouped into four regions. Energy- and output-based emissions factors are applied to C-REM outputs in each projected model year to calculate pollutant emissions, which are used as an input to GEOS-Chem to forecast future regional air quality impacts in 2030.