Impact Assessment of China's Climate
Target towards 2020

Hu Xiulian , Jiang Kejun
Masui Toshihiko, Dai Hancheng
AIM Workshop 2010, Japan

Contents

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1Background2

Research Question

3

Results

4

Conclusion

5

Future work

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2

Background
10000
9000
8000

CO2 Emission in China?

Mt-CO2

7000
6000
5000
4000
3000
2000
1000
0

• China has announced its climate target: reduce carbon intensity
40-45% by 2020 as compared to 2005 levels.
• What does it imply?
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Research Question
Three underlying questions
A. How to achieve the target?
B. What are carbon reduction potentials sector by sector?
C. Where will the impacts of carbon reduction lie?

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Methodology

 AIM/CGE[Country]; Static CGE Model;
 40 Sectors;
 With technology details in power sector;
 Base year 2005, target year 2020.

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How to achieve the target•Capital Increase

GDP

CO2

Population•Population•Labor Productivity Improvement

Technology•Technology Improvement•Non-fossil energy technologies•CCS•Energy efficiency•…

• Driving force: GDP, Energy Intensity, and Carbon Intensity.
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Scenario

Carbon Limit
Non-fossil
energyEnergyefficiency
Technology
Improvement

2005

BaU

CM1

CM2









Increase asplannedIncrease asplannedbase
baseStableImprovement: 2% per year
Agriculture: +1% per year

base

Industry: +3% per year
Service: +2%

Capital changebase

2.8 times increase in 2020

Populationbase

1.13 times of 2005

Labor
productivity

base+5% per year

GDP growthbase+8.3% per year

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Scenario: Technology for power generation
Fuel

Technology

2005 (GW)

2020 (GW)

Coal

SubST

Coal

SupST

Coal

SSupST

Coal

FBC

Coal

IGCC

Oil

Oil

Natural gas

Natural gas

Resource

Hydro

116

300

Resource

Nuclear

7

80

Resource

Wind

1.26

150

Resource

Biomass

2

30

Resource

Solar

0.07

2

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Results: Carbon Intensity Change-8,61%-15,14%-44,34%

2,79
2,55

2,36

1,55

2005

2020BaU

2020CM1

2020CM2

Carbon Intensity• 8.6% reduction comes from energy efficiency improvement;• 6.5% reduction comes from non-fossil energy;• 29.2% reduction comes from CO2 constraint (emission in CM2 is limited to 0.6
times of BaU;
• Carbon price: 55.3 dollar/ton.
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Result: Carbon reduction potential
Service
Other Industry
4%
8%

Coal,oil and gas

Household13%

12%Nonmetallic mineral 4%
Chemicals

6%
41%
10%

Power Generation

Metal processing

Sectoral Contribution to CO2 Reduction• Total reduction compared t BaU: 6.25 bil. ton CO2• The bulk of CO2 abatement comes from power sector, household,metal processing and energy demand reduction;• Reduction from service sectors is minor.
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Impact: GDP growth and loss
Agriculture
Industry132

Service1.850 707 1.011

2005

38%

55%

7% 1.850+8.32%
6.134

2.761

2.851

521

2020BaU

45%

46%

9% 6.134

6.126

2.757

2.848

521

2020CM1

45%

46%

9% 6.126

6.043

2.983

2.597

463

2020CM2

49%

43%

8% 6.043+8.31%+8.21%

GDP: 10 bil. yuan

GDP: Structure100%• GDP growth rates are 8.2%-8.3% per year in all cases;• Economic structure shifts to service industry in BaU and CM2;
• GDP loss in CM1 is 0.122%, in CM2 is 1.48%.
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Impact: Energy Demand
6.32

638 635

5.70

6822
402

3.18

236

2.14

2005

BaU

CM1

CM2

2005

2494

BaU

CM1

CM2

2005

BaU

CM1

Coke [mil.ton]

Coal [bil.ton]

1.13 1.12

0.77 0.76 0.72

CM2Electricity [bil.kwh]
215.0 214.4

1.01
104.5

0.30

0.33

2005 BaU

CM1 CM2

46.8

2005 BaU CM1 CM2Crude oil [bil. ton]

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2005 BaU

Petrol oil [bil. ton]

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CM1 CM2

Natural gas [bil.m3]

12Impact: power generation
SubST
SupST

SSupST
FBC

IGCC
Oil

Natural gas
Hydro

NuclearWind

Biomass
Solar

427.0

166.0
88.1
13.3
0.2

2.9

11.8

2.9

1.0

2005

29.5
4.0

0.6
0.1

0.3

40.3
0.1

9.9

6.6

19.7 36.0
5.2
2.3

0.2
0.7
0.2

89.4 48.3
19.0
0.5
36.5 6.6
10.1
28.5
10.0
4.4
3.0

2020BaU

2020CM2

Power generation from different technologies• In BaU case, share of electricity from coal increases from 68.5% in 2005 to 88%;
• In CM2 case: share of electricity from coal drops to 52%,
electricity from non-fossil fuels increases to 40.5%.
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Impact: sector output
Other services
Health, social security and welfare
R&D
Transportation
Construction
Other manufacturing
Machinery
Water production and supply
Metal processing
Metal and nonmetallic products
ChemicalsElectronic equipment
Mineral mining
Electricity
Gas production and supply
CokingPetro. & nuclear fuelPetro. &gas extraction
Coal mining
Food production
Agriculture-55.0%-35.0%-15.0%

5.0%

25.0%

Increasing sectors

Decreasing sectors• Services• Elec.machine, equip.& supplies• Energy supply sector: coal, gas, electricity etc.
• Mining• Metal processing, etc.

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Conclusion
A. How to achieve the target?
• 8.6% comes from energy efficiency improvement of 2% per year;• 6.5% comes from non-fossil energy use in power sector;• 29.2% comes from carbon limitation.
B. What are carbon reduction potentials sector by sector?
• power sector, household, metal processing and energy demand reduction.
C. Where will the impacts of carbon reduction lie?
• Carbon price will be ca. 55.3 dollar/ton;• GDP loss is 1.48%;• Energy demand for coal, coke, natural gas and electricity will decrease
greatly, while demand for oil will see minor decrease;• Share of electricity from coal drops to 52%, electricity from non-fossil fuels
increases to 40.5%.
• Output from Sectors of services and Elec.machine, equip.& supplies will
increase, while energy intensive sectors will shrink, like energy supply sector,
mining, and metal processing
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Future work
 Set more realistic assumption on energy efficiency
improvement; Develop dynamic CGE model; Include other issues like land-use, water, and air
pollutants;
 Downscale to provincial level; etc.

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AIM Workshop 2010, Japan