CECP - Exploring regional impacts of climate policy in China

Differences in population, share of coal production in provincial GDP, and the size of provincial GDP affect the impact of policy

While the complex economic and energy system linkages among provinces prevent simple explanations of policy impacts, some general trends are apparent.

Population by province in 2010, millions
Share of coal production in provincial GDP in 2010, %
2010 GDP, billions of U.S. 2007 dollars
2030 reduction in CO₂ in 4% Policy scenario compared to No policy scenario, Mt
2030 reduction in population-weighted PM2.5 concentrations in 4% Policy scenario compared to No policy scenario, μg/m³
Change in gross domestic product in 4% Policy scenario relative to No policy scenario, %
CO₂ emissions and PM2.5 concentrations fall most in populous, industrializing provinces

Relative to the No Policy scenario, CO₂ emissions are significantly lower in Shanxi and Guizhou, major centers of coal consumption, in 2030. This corresponds to significant reductions in air pollution in China’s industrializing central provinces.

How the economic impacts of a national climate policy are distributed is ultimately a public policy choice that occurs in the design of the emissions rights (in a CO₂ emissions trading system) or revenue recycling scheme (with a CO₂ tax). The distribution of GDP impacts could look very different, for instance, if a progressive scheme required wealthy provinces to disproportionately foot the bill for the cost of the policy. Without a policy aimed at redistribution, Shanxi province as a coal exporter experiences the deepest reductions in its GDP under climate policy in 2030. While only the 4% Policy scenario is shown here, general trends are similar in the 3% and 5% Policy scenarios.