Scenario analysis of the carbon pricing policy in China's power sector through 2050: Based on an improved CGE model

In this study, an improved computable general equilibrium (CGE) model is developed, and 13 carbon dioxide (CO2) emission scenarios comprising 1 business-as-usual (BAU) scenario and 12 emission-reduction scenarios are designed to evaluate the effects of carbon pricing policy, which includes carbon tax and carbon emission trading, on CO2 emissions, CO2 emission intensity, output, and energy consumption of China's power sector during 2010-2050. Results show that carbon tax policy plays an important role in curbing CO2 emissions but does not work very well in optimizing the energy structure in a short term. Carbon tax also decreases output, and the reduction of CO2 emissions becomes significant as carbon tax rate raises. High carbon tax would significantly promote the reduction of CO2 emissions in the long run. The output of the power sector would increase under the single carbon emission trading policy. CO2 emissions will continually reduce when various sectors participate in carbon emission trading mechanism. However, the combination of carbon tax and carbon emission trading is hopeful to reduce CO2 emissions of China's power sector by 90602.15 Mt during 2010-2050 under the CT30ETAA scenario. Therefore, a policy that combines carbon tax and carbon emission trading is suggested to sharply reduce CO2 emissions and help optimize the energy structure.