Study: China’s New Policies Will Lower CO2 Emissions Faster, Without Preventing Economic Growth

“Using carbon pricing in combination with energy price reforms and renewable energy support, China could reach significant levels of emissions reduction without undermining economic growth,” says Valerie Karplus. Pictured is a photo of Shanghai

“Using carbon pricing in combination with energy price reforms and renewable energy support, China could reach significant levels of emissions reduction without undermining economic growth,” says Valerie Karplus. Pictured is a photo of Shanghai

CAMBRIDGE, Mass. — A new study co-authored by an MIT professor shows that China’s new efforts to price carbon could lower the country’s carbon dioxide emissions significantly without impeding economic development over the next three decades.

Based on a unique model that links China’s energy system and economy, the study finds that China’s coal use, a major source of global carbon dioxide (CO2) emissions, should peak some time around the year 2020, while the country’s overall CO2 emissions would peak around 2030, or perhaps sooner. Even so, the reduction in carbon-intensive economic activity would not prevent China from reaching its government’s goal of being a “well-off society” by 2050.

“Using carbon pricing in combination with energy price reforms and renewable energy support, China could reach significant levels of emissions reduction without undermining economic growth,” says Valerie Karplus, an assistant professor at the MIT Sloan School of Management and a co-author of the new study.

Why spending, not saving, will make China greener

The impetus for the study comes from a headline-making set of recent policy shifts announced by China, including its toughest-ever set of regulations on local environmental pollution. In November 2013, China pledged to create more sustainable economic growth through a series of measures that included creating markets for CO2 emissions as well as other pollutants and scarce resources, such as water, more broadly.

That set of measures also helped form the basis for an agreement to limit carbon use, which the U.S. and China announced in November 2014. Among other things, China committed to a goal of making nonfossil fuel sources account for 20 percent of its energy use by 2030; in 2015, that figure stood at 11 percent. The U.S. pledged to reduce its total CO2 emissions about 26-28 percent by 2025, in comparison to 2005 levels.

In turn, that bilateral agreement has been widely credited with paving the way for the larger set of carbon-reduction pledges agreed to globally at the U.N. Climate Change Conference held in Paris in late 2015.

The study uses a model of China’s economy and energy output, called C-GEM, developed by scholars at the Tsinghua-MIT China Energy and Climate Project. Karplus served as director of that project from 2011-2015. She joined the Sloan faculty in the fall of 2014 as the Class of 1943 Career Development Professor. She is also a faculty affiliate of the MIT Joint Program on the Science and Policy of Global Change and the MIT Energy Initiative.

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