Decarbonizing China’s cities with the lowest cost

Cities, which are the primary economic engine and emission source in China, accounted for 70% of the country’s total energy-related CO2 emissions in 2010. The development of low-carbon cities has become the first priority of policymakers. Low-carbon cities enhance competition in the long run but also inevitably impose costs in the short term. To investigate the associated abatement costs of CO2 toward low-carbon cities, we apply the directional distance function on panel data covering 104 Chinese prefecture-level and above cities from 2001 to 2014. Our results show that, on average, the cost to control one ton of CO2 is 1070 CNY, or equivalent to 129 US $. This cost shows great individual heterogeneity and time variation; the year 2011 witnesses a significant reversal of the marginal abatement cost of CO2. It is because China begins implementing a mandatory CO2 intensity reduction target for the 12th Five-Year Plan (FYP). We establish a four-quadrant matrix framework to identify low-carbon cities and track the low-carbon transition path based on emission indicators (total emissions, per capita emissions, and emission intensity) and abatement cost pairs. Among the four types of emission-cost patterns, more cities are scattered in the "low emission-level and high abatement-cost" quadrant, and eight cities are clarified as low-carbon cities in 2014. In terms of per capita emissions and abatement costs, the “high-per-capita-emission and low-abatement-cost” club include five cities in 2001, while this number rises to seven members in 2014. Most cities are also located in the “low-emission-intensity and low-abatement-cost” zone when the relationship between CO2 intensity and abatement cost is considered. Our results call for policymakers' attention to hot spots and emission-based, per capita emission-based, or intensity-based city-level decarbonizing policies.