The Goal of Carbon Peaking, Carbon Emissions, and the Economic Effects of China’s Energy Planning Policy: Analysis Using a CGE Model

Abstract

This study focuses on the effects of China’s carbon peaking policy, investigating how to balance nonfossil energy consumption and coal consumption to achieve China’s carbon peaking policy goal. The research applies the recursive dynamic computable general equilibrium model to simulate the impact of China’s energy planning policies using five scenarios to analyze the carbon emissions and economic effects of China’s energy planning policy from the perspectives of energy use, carbon emissions, the macroeconomy, and institutional income. The simulation results indicate that to achieve the goal of carbon peaking by 2030, the annual installed capacity of nonfossil energy must reach 112.29 gigawatts, and average annual coal consumption in the China 15th Five-Year Plan and 16th Five-Year Plan should be reduced by 20 million and 40 million tons, respectively, which will result in the proportion of nonfossil energy in primary energy consumption reaching about 25%. Limiting coal consumption will slow economic growth, whereas increasing the installed capacity of nonfossil energy will stimulate economic growth. The combined policies will have a significant impact on reducing carbon emissions and achieving the carbon peaking goal and will also offset the adverse effects of such policies on the macroeconomy.