CICERO - Center for International Climate Research

The Composite Effects of Policy Mix for Low-Carbon Development — A Dynamic CGE Modeling and Cost Effective Analysis for Beijing Case

Mingtai Fan, Taoyuan Wei, Xiaoguang Zhang, Yumei Zhang

The transition to a low-carbon development has gained global momentum in recent decade. China in the industrialization and the urbanization process has to find an effective and inclusive strategy with policy mix for the low-carbon development. This paper aims to highlight the synergy and offsetting effects in terms of economic growth, structure change, energy consumption, and carbon emission of policy mix at industrial level. We take Beijing as a case to employ a regional dynamic CGE model to analyze counter-facturally the cost effective policy mix for low-carbon development in urbanization. The policies in the designed scenarios include: (1) A flat increase in energy efficiency by industry; (2) An increase in investment in electricity industry; (3) A flat carbon tax by industry; (4) A policy pair, i.e. a mix of carbon tax and investment subsidy for energy conservation and emission reduction to keep the governmental revenue neural. The conclusion is that the cost effective low-carbon development strategy should be one on the integrated application of practical policy mix.

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