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The Boundary of Porter Hypothesis: The Energy and Economic Impact of China’s Carbon Neutrality Target in 2060

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  • Shenhai Huang

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China
    School of Economics and Management, North China Electric Power University, Baoding 071003, China)

  • Chao Du

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Xian Jin

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Daini Zhang

    (Jiaxing Hengchuang Electric Power Design & Institute Co., Ltd., Jiaxing 314100, China)

  • Shiyan Wen

    (School of Economics, Xi’an University of Finance and Economics, Xi’an 710003, China)

  • Yu’an Wang

    (School of Applied Economics, Renmin University of China, Beijing 100872, China)

  • Zhenyu Cheng

    (Shandong Academy of Social Sciences, Jinan 250000, China)

  • Zhijie Jia

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China)

Abstract

The process of carbon neutrality does have economic costs; however, few studies have measured the cost and the economic neutral opportunities. This paper uses a dynamic computable general equilibrium (CGE) model to simulate China’s carbon neutrality path from 2020 to 2060 and analyzes its economic impact. This paper innovatively adjusts the CGE modeling technology and simulates the boundary of the Porter hypothesis on the premise of economic neutrality. The results show that the carbon neutrality target may reduce the annual GDP growth rate by about 0.8% in 2020–2060. To make the carbon pricing method under the carbon neutrality framework meet the strong version of the Porter hypothesis (or economic neutrality), China must increase its annual total factor productivity by 0.56–0.57% in 2020–2060; this is hard to achieve. In addition, the study finds that China’s 2030 carbon target has little impact on the economy, but the achievement of the 2060 carbon neutrality target will have a significant effect. Therefore, the paper believes that the key to carbon neutrality lies in the coexistence of technological innovation and carbon pricing to ensure that we can cope with global warming with the lowest cost and resistance.

Suggested Citation

  • Shenhai Huang & Chao Du & Xian Jin & Daini Zhang & Shiyan Wen & Yu’an Wang & Zhenyu Cheng & Zhijie Jia, 2022. "The Boundary of Porter Hypothesis: The Energy and Economic Impact of China’s Carbon Neutrality Target in 2060," Energies, MDPI, vol. 15(23), pages 1-18, December.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:23:p:9162-:d:992098
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