An analysis of China's climate policy using the China-in-Global Energy Model

The primary approach to address climate change in China has been the use of CO2 intensity targets coupled with targets for low carbon energy deployment. We evaluate the impact of extending similar targets through 2050 on China's energy use profile and CO2 emissions trajectory using the China-in-Global Energy Model (C-GEM). The C-GEM is a global computable equilibrium model that includes energy and economic data provided by China's statistical agencies, calibration of savings, labor productivity, and capital productivity dynamics specific to China's stage of development, and regional aggregation that resolves China's major trading partners. We analyze the combined impact of extending CO2 intensity targets, implemented via a cap-and-trade program, and low carbon energy policies (directives for nuclear power expansion and feed-in tariffs for wind, solar, and biomass energy) through 2050. Although with the policy, simulated CO2 emissions are around 43% lower in 2050 relative to a reference (No Policy) counterfactual, China's CO2 emissions still increase by over 60% between 2010 and 2050. Curbing the rise in China's CO2 emissions will require fully implementing a CO2 price, which will need to rise to levels higher than $25/ton in order to achieve China's stated goal of peaking CO2 emissions by 2030.