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Energy and climate change in China

Published online by Cambridge University Press:  30 July 2012

Carlo Carraro  and
Emanuele Massetti
Carlo Carraro
Affiliation:
University of Venice and Fondazione Eni Enrico Mattei, Italy. Email: [email protected]
Emanuele Massetti
Affiliation:
Yale School of Forestry and Environmental Studies, FEEM and CMCC, 195 Prospect Street, New Haven, CT 06511, USA. Tel: 203-4365-783. Email: [email protected] or [email protected]
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Abstract

This paper examines future energy and emissions scenarios in China generated by the Integrated Assessment Model WITCH. A Business-as-Usual scenario is compared with five scenarios in which greenhouse gases emissions are taxed, at different levels. The elasticity of China's emissions is estimated by pooling observations from all scenarios and comparing them with the elasticity of emissions in OECD countries. China has a higher elasticity than the OECD for a carbon tax lower than US$50 per ton of CO2-eq. For higher taxes, emissions in OECD economies are more elastic than in China. Our best guess indicates that China would need to introduce a tax equal to about US$750 per ton of CO2-eq in 2050 to achieve the Major Economies Forum goal set for mid-century. In our preferred estimates, the discounted cost of following the 2°C trajectory is equal to 5.4 per cent and to 2.7 per cent of GDP in China and the OECD, respectively.

Type
Research Article
Information
Environment and Development Economics , Volume 17 , Issue 6 , December 2012 , pp. 689 - 713
Copyright
Copyright © Cambridge University Press 2012

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