Study On China’s Energy Demand And Carbon Emission Reduction Based On The CHINA3E Model

Energy is one of the most important material bases for thr economic growth and social development of a country or region. With the rapid economic growth, China’s energy demand is growing and energy import dependency is more severely, the rising of carbon dioxide emission related to the energy demand increase the environment pressure, studies of China’s energy and environmental issues become one of the critical topics in interentional energy and environmental policy research. This paper focuses on China’s energy demand and carbon dioxide emissions issues, to explore future energy demand and carbon dioxide emissions prospects, as well as issues such as the potential impact of the carbon tax policy reduction questions, and analysis China’s future carbon dioxide marginal carbon dioxide abatement cost in different years.Starting from the aspects of energy and environmental economic system, this paper build the China Dynamic Energy Economy CGE model, first it analysis China’s energy demand and carbon dioxide emissions of the prospects in different economic development scenarios, and simulate the effects of impact of energy use and carbon dioxide emissions when improve the efficiency of oil use to alleviate rising oil prices on economic impact; also introduction of carbon tax policy to analyze the impact of China’s macroeconomic、energy use and carbon dioxide emissions in different carbon tax scenarios, especially the impact of the production capacity of the energy-intensive sectors; Finally it analysis the carbon abatement cost and different industries marginal carbon abatement cost results in different years, these results help to provide an important basis for China’s medium-and long-term energy strategy planning, which also provide decision support for our the energy and environmental policies, thus helping to reduce energy demand and environmental pressures currently facing, and promote the harmonious development between economy, energy and environment. The specific conclusions and innovation mainly include in the following aspects:This paper construct a dynamic CGE model based on the China’s energy and economy(CHINA3E), which implement the dynamic through the accumulation of captital and adjustment of labor, and according to the research needs, many sensitive parameters and energy efficiency technologies that affect our future energy needs are calibrated in the model, also it’s value are more effectively. In addition, CHINA3 E model introduced carbon dioxide emissions and the carbon tax module, which is conducive to the study for energy demand and energy saving policies. The industrial sector in the model include 138 industrial sectors, seven energy production sectors: coal mining and washing industry, the oil industry, the natural gas extraction industry, oil processing industry, coking industry, the production and supply of electricity and heat,gas production and supply.2. Contrapose to the grim situation of China’s future energy demand and carbon dioxide emissions, based on the CHINA3 E model, this paper explored three economic development scenarios: the baseline scenario; the enhanced, low-carbon scenario; and the extensive economic growth scenario, which from the main driving factors affecting energy demand and policy tools of emission reduction. And it analyzed China’s primary energy demand, CO2 emissions trends, and energy consumption structure under different policies, and it can be an effective policy tool for analyzing China’s future energy security situation and controlling China’s greenhouse gas emissions. A dynamic energy computable general equilibrium(CGE) model, which based on the Monash model, was used to evaluate China’s energy economy(CHINA3E Model) and to predict and analyze China’s energy demand trends. The investigation results show that due to the current economic increase patterns and the economic growth rate, without new policy measures, the energy demand will grow rapidly through 2020. However, under an appropriate low-carbon policy, the primary energy demand will be 4.55 billion tons of standard coal equivalents, and the emissions in 2020 will be 1.635 metric tons of carbon dioxide per ten thousand Yuan, decreasing emissions by 45% from the 2005 emissions level. To slow the rapid growth of energy demand, optimize the energy structure, promote economic restructuring, and achieve emissions reduction objectives,many energy-saving measures can be instituted, such as improving the industrial structure and implementing a carbon tax policy. In fact, the conclusions show that a carbon tax will reduce the demand for fossil fuels, decreasing carbon dioxide emissions,transitioning China to a low carbon society, and achieving the carbon dioxide emissions reduction target by 2020. These policies can help effectively manage China’s serious energy security situation, protect the security of the energy supply, and control greenhouse gas emissions.3. Contrapose to the diversity and complexity of the oil price shocks transmission channels, using the CHINA3 E model approach also being constructed, this paper simulate the effect of improving oil utilization efficiency in alleviate the world crude oil price fluctuations on China’s negative economic growth, also have a reaearch on the relationship between the rising oil prices and oil use efficiency, analyze how much the oil utilization efficiency can offset the negative impact of rising oil prices shock on China’s economy.Finally, this paper finds the equilibrium point.The investigation results show that: fore the economic growth point of view, the increase in crude oil utilization efficiency can mitigate and even offset the negative impact brought by the oil price fluctuations, when the international oil price rise 7%, the impact of GDP in 2012 will be not negative, and also increase 0.18% and 0.57% respectively which caused by improving the petroleum using efficiency on 4% and 8%. In addition, the improving of petroleum efficiency can reduce energy demand and CO2 emissions, also promote the development of the industrial structure to the first and secondary industries. Therefore,in order to slow down the international oil prices negative impact on China’s economic growth, the increase in oil utilization efficiency, which can be as a coping tactics and a technical progress method, can effectively guarantee the long-term sustainable development of China’s economic growth in the future.4. Contrapose to the question of carbon tax impact on China’s economy, this paper base on the dynamic CGE model of China’s energy economy, it introduced three different carbon tax scenarios: unified low rate tax scenarios, the unified high rate scenario and gradually increasing carbon tax policy scenarios, and simulate and analysis of the levy carbon tax rate the effect of the program on China’s macro economy, CO2 emissions, and of industrial output, energy structure and industry structure, especially the impact of the industrial output of the energy-intensive sectors. The results show that the carbon tax will have a a negative impact on China’s GDP, total investment,household consumption, import and export, with the gradual warming decline of the rate of employment and the rate of return on capital, capital stock decline more slowly,and the real GDP will decline. Implementation of the carbon tax policy will increase the cost of energy-intensive products and drive up the prices, which also decrease the total output of fossil energy and high-energy-consuming industries, the coal mining industry output relative changes is-2.34% and-2.02% in 2013. In addition, the carbon tax policy can effectively slow down China’s energy demand and carbon dioxide emission pressure,in the three carbon tax policy scenarios, CO2 emissions, energy intensity and CO2 emissions intensity will decrease, the higher the carbon tax, energy conservation is more obvious. In unified low carbon tax rate scenario, China’s energy intensity and CO2 emissions intensity in 2020 are 0.86 tce per ten thousand Yuan and 1.76 tons per metric tons of carbon dioxide per ten thousand Yuan(2002 prices) respectively, respectively,equivalent to 37.70% and 41.31% decline in 2005, In unified high carbon tax rate(100Yuan / ton) scenario, energy intensity and CO2 emission intensity are 0.76 tce per ten thousand Yuan and 1.52 per metric tons of carbon dioxide per ten thousand Yuan respectively in 2020, also equivalent to decreased by 45.03% and 49.31% respectively in 2005.5. Aiming at the problem of power market reform, the impact of electricity price liberalization on energy demand and the cost of carbon emissions control is analyzed by CHINA3 E model. The results show that in order to maintain economic growth, China needs more energy input in fixed price policy, and lead to more carbon emissions. Take2020 as an example, in the baseline scenario, China uses fixed tariff policy compared to the floating tariff policy energy consumption increased by 3.14%, carbon emissions increased by 14.87%. In order to achieve the same carbon emission reduction targets,the constraint of fixed price will lead to a more expensive emission reduction costs. For example, in 2020, if China continues the fixed price policy, the carbon tax levy makes China’s real GDP compared to the benchmark scenario of about 0.72%, while thefloating price policy is only 0.57%. The study also found that if the fixed price policy extended to 2020, China should pay 540 million yuan subsidies for theelectricity enterprises.