Socioeconomic impact assessment of China's CO₂ emissions peak prior to 2030

Highlights

• An integrated model of economy and climate is developed based on input-output analysis.

• China may reach its peak CO₂ emissions at 11.20 Gt in 2026.

• China will remove about 22 Gt of CO₂ from 2015 to 2035.

• Carbon intensity levels will decline by 45% in China from 2015 to 2035.

Abstract

China is the largest emitter of carbon emissions in the world. In this paper, we present an Integrated Model of Economy and Climate (IMEC), an optimization model based on the input-output model. The model is designed to assess the tradeoff between emission deceleration and economic growth. Given that China's projected average growth rate will exceed 5% over the next two decades, we find that China may reach its peak CO₂ emissions levels by 2026. According to this scenario, China's carbon emissions will peak at 11.20 Gt in 2026 and will then decline to 10.84 Gt in 2030. Accordingly, approximately 22 Gt of CO₂ will be removed from 2015 to 2035 relative to the scenario wherein China's CO₂ emissions peak in 2030. While this earlier peaking of carbon emissions will result in a decline in China's GDP, several sectors, such as Machinery and Education, will benefit. In order to reach peak CO₂ emissions by 2026, China needs to reduce its annual GDP growth rate to less than 4.5% by 2030 and decrease energy and carbon intensity levels by 43% and 45%, respectively, from 2015 to 2030.

Introduction

In the “U.S.–China Joint Announcement on Climate Change” released in 2014, China announced that its carbon dioxide (CO₂) emissions will peak by 2030. China's CO₂ emissions through 2030 will have strong implications for the challenge of limiting temperature changes caused by anthropogenic greenhouse gas (GHG) emissions to less than 2 °C from pre-industrial levels. According to the Intergovernmental Panel on Climate Change's (IPCC) Fifth Assessment Report, the 2 °C target is likely to be achieved if atmospheric concentrations are controlled to 450 parts per million (ppm) carbon dioxide equivalent (CO₂eq) through 2100. To accomplish this, global GHG emissions need to be reduced to 30–50 GtCO₂eq by 2030 (IPCC, 2014). However, China's CO₂ emissions from fuel combustion were 8.5 Gt in 2013, accounting for a quarter of global emissions (Liu et al., 2015b, Liu et al., 2016, Yuan et al., 2016). In fact, China's carbon emissions have shown exponential growth over the past several decades and accounted for more than half of the increase in global CO₂ emissions from 1990 to 2012 (Feng et al., 2013). If China does not take measures to control GHG emissions, its CO₂ emissions may reach as high as 18 Gt by 2030 (Guan et al., 2008, Tol, 2013), in which case the global 2 °C target would be unlikely to be achieved. However, China can significantly reduce its carbon emissions if it takes measures to achieve peak CO₂ emissions levels by 2030. In this paper, we assess potential socioeconomic impacts of China's CO₂ emissions if they reach peak levels prior to 2030.

Over the past decade, numerous institutions and researchers have attempted to predict the year during which China's CO₂ emissions will peak. The most common tools used are environmental Kuznets curve (EKC) theory (Chang, 2015, Diao et al., 2009, Richmond and Kaufmann, 2006), scenario analysis (He et al., 2012, Liu et al., 2015a, Zhang et al., 2016), and the IPAT model (He, 2013, Sadorsky, 2014, Yuan et al., 2014). Based on these different methods, researchers usually get different results on the peaking time of China's CO₂ emissions. Zhang et al. (2014) used scenario analysis to research the role of technologies in CO₂ mitigation in China. They found that China's CO₂ emissions would peak by 2020 in a global carbon tax regime. He et al. (2012) proposed that China should peak its CO₂ emissions around 2030 and realize a sharp emissions mitigation by 2050. Hao and Wei (2015) used Green Solow model (GSM) to forecast the turning point in China's CO₂ emissions. The results showed that China's CO₂ emissions would peak around 2047.

However, these methods can only determine when China's CO₂ emissions will peak; they do not denote how such levels may be achieved. Therefore, we develop the Integrated Model of Economy and Climate (IMEC) based on the input-output model. In this paper, we use the IMEC model to explore whether China's CO₂ emissions will peak before 2030 and whether China will incur social costs as a result of achieving this goal.

The input-output model has been extensively used in analyses of CO₂ emissions (Mi et al., 2015a, Mi et al., 2016). Some researchers have used the input-output model to assess drivers of carbon emissions. The model is typically integrated with the structural decomposition analysis (SDA) to support the examination of emissions drivers and contributions. These drivers include gross domestic product (GDP) growth, energy efficiency, carbon efficiency, production structure, consumption structure, and population (Minx et al., 2009). China's carbon emission drivers have been quantified using this method (Su and Ang, 2012, Wei et al., 2016). Guan et al. (2008) used the input-output model to analyze drivers of Chinese CO₂ emissions and to forecast resulting carbon emissions. Their results showed that China's production-related CO₂ emissions would increase threefold by 2030.

Some scholars have used the multi-region input-output (MRIO) model to calculate consumption-based CO₂ emissions and to analyze emissions embodied in interregional or international trade (Su and Ang, 2011, Weber and Matthews, 2007, Wiedmann, 2009). Carbon emissions embodied in international trade have increased considerably over the last several decades; these emissions are exported from China and other emerging markets to developed countries. For example, Peters and Hertwich (2008) found that over 5.3 Gt of CO₂ were embodied in international trade in 2001. Davis and Caldeira (2010) showed that approximately 6.2 Gt of CO₂ emissions were traded internationally in 2004 (23% of global emissions). Peters et al. (2011) showed that carbon emissions embodied in international trade increased to 7.8 Gt of CO₂ in 2008 (26% of global emissions). Carbon leakage may also occur within a country's borders, and especially among countries exhibiting imbalanced regional development. Feng et al. (2013) tracked CO₂ emissions embodied in trade between Chinese provinces and internationally. Their results showed that 80% of carbon emissions embodied in goods consumed in highly developed coastal regions were imported from less developed Chines provinces.