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China's sectoral strategies in energy conservation and carbon mitigation

Author

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  • Can Wang
  • Yuan Yang
  • Junjie Zhang
Abstract
This article reviews China's energy and climate strategies in the electric power, industrial, building, and transport sectors. These four sectors account for about three-quarters of China's total energy consumption and energy-related carbon emissions. We identify major gaps in China's energy and climate polices based on the status quo: first, command-and-control policies not only are costly, but also cannot accommodate the transition of energy consumption from production sectors to consumption sectors; second, unsmooth deployment of renewable energy poses challenges for decarbonizing China's electricity system. To close these gaps, we suggest two policy priorities: a carbon market to achieve cost-effective emission reduction, and a Renewable Quota System to promote the utilization of renewable energy. Challenges associated with these policies are discussed. Furthermore, we suggest that a sectoral approach can serve as a first step for China to make meaningful commitments under a prospective international climate treaty. In particular, the cement, steel, and aluminium sectors can be among the first groups to join this sectoral approach. Policy relevance We argue that China's sectoral climate policies should prioritize both the development of a carbon market to achieve cost-effective carbon mitigation and the improvement of renewable supporting polices to foster long-term renewable technology investment. However, to fully explore the advantages of a carbon market, we suggest that more stringent emission caps should be set at the national level. In addition, the carbon market and existing energy and climate policies should be carefully harmonized. In particular, the overlaps between existing command-and-control mitigation polices and the carbon market should be reduced to improve cost-effectiveness. In parallel with a carbon market, we suggest a second-best policy, the Renewable Quota System, as a supplement to the carbon market to foster green technology development and to create preconditions for a more stringent cap. At the international level, a sectoral approach can serve as a first step for China to make meaningful commitments under a prospective international climate treaty. In particular, the cement, steel, and aluminium sectors can be among the first group to join this sectoral approach.

Suggested Citation

  • Can Wang & Yuan Yang & Junjie Zhang, 2015. "China's sectoral strategies in energy conservation and carbon mitigation," Climate Policy, Taylor & Francis Journals, vol. 15(sup1), pages 60-80, December.
    • Handle: RePEc:taf:tcpoxx:v:15:y:2015:i:sup1:p:s60-s80
    DOI: 10.1080/14693062.2015.1050346
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    References listed on IDEAS

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    1. Oecd, 2013. "Climate and Carbon: Aligning Prices and Policies," OECD Environment Policy Papers 1, OECD Publishing.
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    Cited by:

    1. Zhang, Yue-Jun & Hao, Jun-Fang & Song, Juan, 2016. "The CO2 emission efficiency, reduction potential and spatial clustering in China’s industry: Evidence from the regional level," Applied Energy, Elsevier, vol. 174(C), pages 213-223.
    2. Zhang, ZhongXiang, "undated". "Making China the transition to a low-carbon economy: Key challenges and responses," Working Papers 249516, Australian National University, Centre for Climate Economics & Policy.
    3. Yiguo Chen & Peng Luo & Tsangyao Chang, 2024. "Testing the Effectiveness of Government Investments in Environmental Governance: Evidence from China," Sustainability, MDPI, vol. 16(14), pages 1-18, July.
    4. Yang, Yuan & Wang, Can & Liu, Wenling & Zhou, Peng, 2018. "Understanding the determinants of travel mode choice of residents and its carbon mitigation potential," Energy Policy, Elsevier, vol. 115(C), pages 486-493.
    5. Wang, Xu & Zhu, Lei & Fan, Ying, 2018. "Transaction costs, market structure and efficient coverage of emissions trading scheme: A microlevel study from the pilots in China," Applied Energy, Elsevier, vol. 220(C), pages 657-671.
    6. Zheng, Saina & Zhai, Haibo & Hsu, Shu-Chien & Armanios, Daniel Erian, 2024. "Uneven distribution in energy conservation services through performance contracts in China," Energy Policy, Elsevier, vol. 187(C).
    7. Mu, Yaqian & Wang, Can & Cai, Wenjia, 2018. "The economic impact of China's INDC: Distinguishing the roles of the renewable energy quota and the carbon market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2955-2966.
    8. Zhu, Chen & Lee, Chien-Chiang, 2022. "The effects of low-carbon pilot policy on technological innovation: Evidence from prefecture-level data in China," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    9. Wu, Shu & Hu, Fangfang & Zhang, Zhijian, 2024. "Visible hand or invisible hand in climate governance? Evidence from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 204(C).
    10. Rongxin Chen & Xinyuan Shi, 2023. "The Inhibition and Equilibrium of Policy Effectiveness of the Low-Carbon Economy: Evidence from Liaoning Province of China," IJERPH, MDPI, vol. 20(5), pages 1-17, February.
    11. Zheng, Shiming & Yao, Rongrong & Zou, Ke, 2022. "Provincial environmental inequality in China: Measurement, influence, and policy instrument choice," Ecological Economics, Elsevier, vol. 200(C).
    12. Li, Zhenghui & Huang, Zimei & Su, Yaya, 2023. "New media environment, environmental regulation and corporate green technology innovation:Evidence from China," Energy Economics, Elsevier, vol. 119(C).
    13. Liu, Baoliu & Cifuentes-Faura, Javier & Ding, Chante Jian & Liu, Xiaoqian, 2023. "Toward carbon neutrality: How will environmental regulatory policies affect corporate green innovation?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1006-1020.
    14. Xiping Wang & Hongdou Zhang, 2018. "Optimal design of carbon tax to stimulate CCS investment in China's coal‐fired power plants: A real options analysis," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 8(5), pages 863-875, October.
    15. Gao, Shuai & Smits, Mattijs & Mol, Arthur P.J. & Wang, Can, 2016. "New market mechanism and its implication for carbon reduction in China," Energy Policy, Elsevier, vol. 98(C), pages 221-231.
    16. Xiaoyang Sun & Baosheng Zhang & Xu Tang & Benjamin C. McLellan & Mikael Höök, 2016. "Sustainable Energy Transitions in China: Renewable Options and Impacts on the Electricity System," Energies, MDPI, vol. 9(12), pages 1-20, November.

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