ZHANG Xiliang, professor of Institute of Energy, Environment Economy, Tsinghua University and colleague published an article named Research on the Pathway and Policies for China's Energy and Economy Transformation toward Carbon Neutrality on Journal of Management World.

In 2020, President Xi Jinping announced China's goal of striving to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. To achieve these goals, China's energy and economy system needs a profound transformation.

In this study, they analyze the logic and the pathway of transforming China's energy and economy system, quantify the emissions reduction contribution and required supporting policies of major emissions reduction measures in different periods, and conduct uncertainty analysis on key factors of the energy and economy transformation pathway.

They use a top-down global computable general equilibrium energy-economic model, China-in-Global Energy Model (C-GEM), for scenario simulation analysis. They further use three bottom-up technology models to cross-check the energy consumption and technology deployment in the power, transportation, and building sectors, generated by the C-GEM.

To limit global warming well below 2℃ and as close to 1.5℃ as possible, they show that China's energy-related CO2 emissions should peak in the middle of the 15th Five-Year Plan (FYP), with the level of around 10.5 billion tons of CO2; By 2050, China's energy-related CO2 emissions need to be reduced by about 75%, compared with the peak level; Before 2060, carbon neutrality needs to be achieved. Carbon neutrality can contribute to the high-quality development of China's economy. China's GDP per capita will surpass US$20,000 and US$30,000 in 2030 and 2050, respectively.

To achieve this emissions pathway, China should further improve its energy efficiency. Its primary energy consumption needs to be plateaued in 2030; By 2060, its GDP energy intensity needs to be reduced by 75%, compared with the 2020 level. We show that energy efficiency improvement is a major contributor to emissions reduction before China's emissions peak. China should also continue to promote the transformation of the energy system with new energy as the dominant supply and increase the share of non-fossil energy in total primary energy consumption to more than 80% by 2060. In addition, China should further promote electrification and decarbonize the power sector. Promoting carbon capture, utilization, and storage (CCUS) and carbon removal technology is essential to reduce the emissions mitigation cost during the last phase of carbon neutrality. Carbon pricing will play a key role in providing adequate incentives for low-carbon and zero-carbon technological innovation and industrial transformation and upgrading to achieve carbon neutrality.

There is a lack of the knowledge on China's pathways to achieve carbon neutrality. There are also few studies on the transition cost of and policy interventions for achieving the carbon neutrality goal. This study fills the gap by developing a powerful analytical tool of carbon neutrality pathways, which integrates the analysis of energy transition, economic transition and policy interventions, conducting an integrated assessment of the key technological options and the carbon price level for achieving the carbon neutrality goal with the analytical tool developed, and providing theoretical and technical supports for the carbon neutrality technology roadmap formulation and carbon pricing development in China.

Article information:

Authors: Zhang Xiliang, Huang Xiaodan, Zhang Da, Geng Yong, Tian Lixin , Fan Ying and Chen Wenying