未來(lái)能源研究所-中國(guó)全國(guó)二氧化碳排放交易體系的一般均衡評(píng)估

China’sNationwideCO2

EmissionsTradingSystem:AGeneralEquilibrium

Assessment

LawrenceH.Goulder,XianlingLong,ChenfeiQu,DaZhang

WorkingPaper24-02

February2024

ResourcesfortheFuturei

AbouttheAuthors

LawrenceH.GoulderistheShuzoNishiharaProfessorinEnvironmentalandResource

EconomicsatStanfordUniversityandDirectoroftheStanfordCenterfor

EnvironmentalandEnergyPolicyAnalysis.HeisalsotheKennedy-GrossmanFellowinHumanBiologyatStanford;aSeniorFellowatStanford'sInstituteforEconomicPolicyResearch;aResearchAssociateattheNationalBureauofEconomicResearch;andaUniversityFellowofResourcesfortheFuture.

XianlingLongobtainedherPhDfromStanfordUniversityin2020.Sheisnowan

assistantprofessorattheNationalSchoolofDevelopment,PekingUniversity.

ChenfeiQuisaffiliatedwiththeInstituteofEnergy,Environment,andEconomyatTsinghuaUniversity.

DaZhangisanassociateprofessorattheInstituteofEnergy,Environmentand

EconomyatTsinghuaUniversity.HeisaresearchassociatefortheJointProgramontheScienceandPolicyofGlobalChangeatMassachusettsInstituteofTechnology,

andanassociateeditorfortheJournalofGlobalEconomicAnalysis.Hismainresearchinterestsincludeenergyandenvironmentaleconomics,energysystemmodeling,

appliedgeneralequilibriummodeling,andorganizationaleconomics.

Acknowledgments

WearegratefulforhelpfulcommentsfromCarolynFischer,GuojunHe,ChristopherR.

Knittel,GilbertE.Metcalf,AlistairRitchie,ThomasRutherford,RobertonWilliams,

XiliangZhang,andparticipantsintheNBEREnvironmentalandEnergyEconomicsProgramMeeting,WorldBankClimateChangeandDevelopmentResearchSeminar,MannheimConferenceonEnergyandEnvironment,andAERE2023Summer

Conference.WethankShuxiaoWangandYishengSunforcontributingdataand

outputsfromtheirair-qualitymodelandShifrahAron-Dine,BingLiuandEricWeinerforexcellentresearchassistance.WealsogratefullyacknowledgefinancialsupportfromtheEnergyFoundationChina,AsiaSocietyPolicyInstitute,NationalNatural

ScienceFoundationofChina,MinistryofEducationofChina,andEnvironmental

DefenseFund.

China’sNationwideCO2EmissionsTradingSystem:AGeneralEquilibriumAssessmentii

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ResourcesfortheFutureiii

Abstract

China’srecentlylaunchedCO2emissionstradingsystem,alreadytheworld’slargest,aimstocontributeimportantlytoglobalreductionsingreenhousegasemissions.Thesystem,atradableperformancestandard(TPS),differsimportantlyfromcapand

trade(C&T),theprincipalapproachusedinothercountries.Weofferadynamic

generalequilibriumassessmentofthisnewventure,employingamodelthatuniquelyconsidersinstitutionalandfiscalfeaturesofChina’seconomythatinfluenceeconomy-widepolicycostsanddistributionalimpacts.

Keyfindingsincludethefollowing.TheTPS’senvironmentalbenefitsexceeditscostsbyafactoroffivewhenonlytheclimatebenefitsareconsideredandbyasignificantlyhigherfactorwhenhealthbenefitsfromimprovedairqualityareincluded.Its

interactionswithChina’sfiscalsystemsubstantiallyaffectitscostsrelativetothoseofC&T.Employingasinglebenchmarkfortheelectricitysectorwouldlowercostsby

overathirdrelativetotheexistingfour-benchmarksystembutincreasethestandarddeviationofpercentageincomelossesacrossprovincesbymorethan60percent.

Introducinganauctionasacomplementarysourceofallowancesupplycanlower

economywidecostsbyatleast30percent.

China’sNationwideCO2EmissionsTradingSystem:AGeneralEquilibriumAssessmentiv

Contents

1.Introduction

1

2.TheTPS

6

2.1.BasicFeatures

6

2.2.ProducerBehaviorandEfficiencyImplications

7

3.TheNumericalModel

10

3.1.MainFeatures

10

3.2.Production

11

3.2.1.PrimaryFactors

11

3.2.2.SectorsandSubsectors

12

3.2.3.State-OwnedEnterprisesandAdministeredPricing

14

3.3.HouseholdBehavior

15

3.4.GovernmentBehavior

15

3.5.ForeignTrade

15

3.6.Equilibrium

16

3.7.Dynamics

16

4.DataandParameters

16

4.1.Data

16

4.2.Parameters

17

5.Scenarios

18

6.Results

20

6.1.AggregateImpacts

20

6.1.1.EmissionsReductions

20

6.1.2.AggregateCosts

22

6.2.SectorImpacts

26

6.2.1.SectorandSubsectorPrices,Outputs,andProfits

26

6.2.2.ImpactsonRenewables

28

6.3.NetBenefits

29

6.4.ImpactsofAuctioning

32

6.5.Trade-offsbetweenEfficiencyandDistributionalImpacts

34

7.Conclusions

35

8.References

37

ResourcesfortheFuturev

AppendixA.ProductionStructureandFunctionalForms

43

A.1.Production

44

A.2.State-OwnedEnterprises

46

A.3.AdministeredElectricityPricing

46

A.4.FactorTypesandSupply

47

A.5.InputsandOutputs

48

A.5.1.OptimalInputIntensities

48

A.5.2.OptimalSupplyofOutput

49

A.6.HouseholdBehavior

50

A.6.1.Consumption

50

A.6.2.Investment

52

A.7.GovernmentBehavior

54

AppendixB.DataandMethodforSubsectorClassificationandDataProcessing55

B.1.SubsectorClassification

55

B.1.1.ElectricitySector

55

B.1.2.Cement

56

B.1.3.Aluminum

57

B.1.4.IronandSteel

59

B.2.DataProcessing

61

B.2.1.DisaggregatingSector-LevelDatatotheSubsectorLevel

61

B.2.2.Input-OutputTableRebalance

62

B.3.DataonImportandExportandEmissionsIntensitybySector

63

AppendixC.ParametersandCalibrationMethods

66

C.1.ProductionParameters

66

C.1.1.SubstitutionElasticityBetweenElectricityandOtherFuels(σe)66

C.1.2.SubstitutionElasticityBetweentheEnergyCompositeandFactor

Composite(σemw)

66

C.1.3.ParametersRelatedtoRenewableEnergySupply

70

C.1.4.ParametersRelatedtoSOEs

72

C.1.5.OtherParameters

77

C.2.ParametersInfluencingIntertemporalAllocationandDynamics79

C.3.ValueofBenchmarks

80

AppendixD.TheSignificanceofPre-ExistingTaxes

82

China’sNationwideCO2EmissionsTradingSystem:AGeneralEquilibriumAssessmentvi

AppendixE.DynamicsofaPotentialTransitionfromaTPStoaC&T83AppendixF.EvaluationofPM2.5ConcentrationsandCorrespondingHealthCobenefits84

AppendixG.EstimationoftheGeographicalCostDistribution88AppendixH.SensitivityAnalysis91AppendixReferences97

101

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1.Introduction

Chinahaslaunchedanambitiousnationwideprogramtoreduceemissionsofcarbondioxide(CO2)andaddressclimatechange.Introducedin2021,theprogramhas

alreadybecometheworld’slargestemissionstradingsystem.Itisexpectedtomakeamajorcontributiontohaltingaggregateemissionsgrowthby2030andachievingnet-zeroCO2emissionsbefore2060.

Thenewsystemisatradableperformancestandard(TPS),asysteminwhich

compliancedependsonacoveredfacility’semissionsintensity.Ineverycomplianceperiod,thegovernmentassignseachcoveredfacilityemissionsallowancesbasedonitsoutputandagovernment-assigned“benchmark”ratioofemissionsperunitof

output.Ingeneral,thebenchmarksaresetbelowtheaverageinitialemissions

intensitiesacrossthecoveredfacilities,whichimpliesthatChina’sTPSwillrequireanoverallreductionintheemissions-outputratio.

ATPSisanexampleofanoutput-orientedemissionsintensitystandard,asitimposesaceilingontheratioofemissionstooutput.

1

Itcanbecontrastedwithaninput-

orientedrate-basedstandard,whichimposesafloorontheratioof“clean”(low-

polluting)to“dirty”(high-polluting)inputstoproduction.

2

ATPSincludesprovisionsfortradingemissionsallowances.Tradesalterthedistributionofabatementeffortsacrossfacilitiesandbringaboutmoreabatementbyfacilitiesthatcanachieve

emissionsreductionsatthelowestcost.Inthisrespect,aTPSsharesakeyfeatureofcapandtrade(C&T),theprincipaltypeofemissionstradingprogramusedinothercountries.

1Fischer(2001)offeredafoundationaltheoreticalstudyoftheefficiencypropertiesofaTPS.SubsequentstudiesexaminingpotentialoractualUSrate-basedclimatepoliciesinclude

Fischeretal.(2017),Bushnelletal.(2017),Zhangetal.(2018),andChenetal.(2018).RecentstudiesofChina’sTPSincludePizerandZhang(2018),Goulderetal.(2022),Wangetal.

(2022),andKarplusandZhang(2017).

2Examplesofinput-orientedintensitystandardsincludelow-carbonfuelstandards,whichhavebeenintroducedinseveralUSstates,andrenewableportfoliostandards,whichestablisha

floorontheratioofrenewables-generatedtofossil-generatedelectricitypurchasedbyelectricutilities.Input-orientedintensitystandardsimplicitlysubsidizethecleanerinputsandtaxthedirtierones.Studiesoflow-carbonfuelstandardsincludeHollandetal.(2009,2015),andBentoetal.(2020).AnalysesofrenewableportfoliostandardsincludeFischer(2010),Fischerand

Preonas(2010),andBentoetal.(2018).Aclosecousintoarenewableportfoliostandardisa

cleanelectricitystandard,whichimposesafloorontheratioof“clean”electricitytofossil-

generatedelectricityusedbyutilities,where“clean”mayalsoincludeenergyfromnuclear

powerplantsandrenewablesources.Goulderetal.(2016)andBorensteinandKellogg(2022)examinesuchstandards.FullertonandMetcalf(2001),FischerandNewell(2008),GoulderandParry(2008),Parryetal.(2016),Fischeretal.(2017),Metcalf(2019),andDimanchevand

Knittel(2023)surveytheefficiencyattractionsandlimitationsofawiderangeofclimatepolicyinstruments,includingintensitystandardsandcapandtrade.

China’sNationwideCO2EmissionsTradingSystem:AGeneralEquilibriumAssessment

2

However,aTPSdiffersfromC&Tinimportantways.UnderC&T,acoveredfacility’s

complianceisbasedontheabsolutequantityofitsemissionsoverthecompliance

period.Thisquantitymustnotexceedthefacility’sallocatedemissionsallowances,anamountthatusuallyisexogenousfromthecoveredfacility’sperspective.

3

Incontrast,undertheTPS’sintensity-basedapproach,thenumberofallowancesgrantedtoa

coveredfacilityisendogenous:itistheproductofthefacility’sassignedbenchmarkanditschosenlevelofoutput.Thisintensity-basedallocationmethodoffersthe

coveredfacilityjustenoughallowancestojustifytheemissionsitwouldgenerateifitsactualemissions-outputratiomatcheditsbenchmark.Theendogeneityofthe

allowanceallocationisanimportantdifferencefromC&T—adifferencewithimportantimplicationsforthecostsofachievingthenation’soverallemission-reductiontargetsandthedistributionalimpacts.

Thispaperpresentsthestructureandresultsfromamultisector,multiperiodgeneralequilibriummodeldesignedtoevaluateChina’sneweffort.Weapplythemodelto

assesstheTPS’simpactonoutputlevels,productioncosts,prices,andCO2emissionsoverthe2020–2035interval.

Themodelhasseveraldistinguishingfeaturesthatenableittoidentifyeconomic

forcesandoutcomesthathavereceivedlittlepriorrecognition.First,itpaysclose

attentiontothestructureandcomplianceobligationsofChina’sTPS.Muchofthe

earlierliteratureonitdisregardssignificantdifferencesbetweentheTPSandC&T.

AlthoughsomerelativelyrecentstudiesofChina’snationwideclimatepolicyefforts

recognizethesedifferences,

4

thispapermakesafurthercontributionbyconsideringhowinstitutionalandregulatoryfeaturesofChina’seconomyinfluenceTPSandC&Toutcomes.Thesefeaturesincludetheadministeredpricingofsomeelectricityoutput,supportingpoliciesforrenewableelectricity,pre-existingtaxesandsubsidies,andthepreferentialtreatmentofstate-ownedenterprises(SOEs).ThepapershowsthatthesefeaturessignificantlyinfluencetheTPS’scostsandtheirdifferencescomparedto

C&T.

Second,themodelemploysageneralequilibriumframework,whichenablesitto

addressinteractionsamongsectorscoveredbytheTPSandbetweencoveredand

uncoveredsectors.EarlierstudiesexaminingChina’sTPShavetendedtoemploy

partialequilibriummodels.

5

WeareawareofonlyonegeneralequilibriummodelthatstudiedChina’sTPS:Yuetal.(2022).

6

Ourmodeldiffersfromthatoneinseveralways.

3AfewC&Tsystemsincludeprovisionsforoutput-basedallocation,whichconnectsafacility’sallowanceallocationtoitschosenlevelofoutput;thus,theallocationisendogenousinthis

case.

4See,forexample,GengandFan(2021),Goulderetal.(2022),IEAandTsinghuaUniversity(2021),MaandQian(2022),Wangetal.(2022),Yuetal.(2022),andZhangetal.(2023).

5ThepartialequilibriumstudiesincludeGengandFan(2021),Goulderetal.(2022),IEA(2022),MaandQian(2022),Wangetal.(2022),andZhangetal.(2023).

6LinandJia(2019),Jinetal.(2020),andWuetal.(2022)assessthegeneralequilibrium

impactsofanationwideemissionstradingsysteminChina.However,thesystemsconsideredinthesestudiesareC&TratherthanaTPS.

ResourcesfortheFuture

3

Inadditiontoincorporatingtheinstitutionalandregulatoryfeaturesjustdescribed,itemploysplant-leveldata,enablingittoaccountforheterogeneousproduction

technologieswithinsectorsandthewithin-andacross-sectorvariationofTPS

benchmarks—consistentwiththeactualTPSdesign.Inaddition,whileYuetal.focusonlyonthefirstTPSphase,whenitcoversonlytheelectricitysector,ouranalysisalsoconsidersthelaterphases,duringwhichcoverageextendstoseveralothersectors.

Third,themodelisintertemporal,capturingchangesinpolicystringencyandimpactsovertime.ThefewTPSstudiesthatincorporateintertemporaldynamicstendtofocusonindividualsectors.

7

Ourmodel’sdynamicgeneralequilibriumframeworkcanassesshowtheabsoluteandrelativecostsoftheTPSandC&Tchangeovertimewiththe

changesinsectorcoverageandpolicystringency.

Finally,themodelhasconsiderableflexibilityintermsoftherangeoffutureTPS

policydesignsitcanexamine,dimensionsthathavenotbeencomprehensively

analyzedintheliterature.Theseincludealternativespecificationsforthevariationandaveragestringencyofbenchmarksandtheintroductionofallowanceauctioning.

AlthoughChinahasalreadyintroducedthefirstphaseoftheTPS,theMinistryof

EnvironmentandEcology(MEE)—responsiblefordesigningandimplementingthe

program—iscontinuingtomakeimportantdecisionsaboutthedesignoflaterphases.Themodelcanincorporatethealternativepotentialpolicydesigns,whichhave

differingimplicationsforaggregatecosts,theirdistributionacrosssectorsand

regions,andthescaleofemissionsreductions.TheflexibilitymakesthismodelpoisedtoofferimportantpolicyrecommendationsforChina’scontinuallyevolvingcarbon

emissionstradingsystem.

TheresultsfromouranalysisyielduniqueandsignificantinsightsintothepotentialimpactsofChina’snewnationwideclimatepolicyeffort.First,wefindthattheTPS’senvironmentalbenefitsarelikelytobewellaboveitseconomiccost.Ourcentral

estimateisthattheclimatebenefitsfromtheTPS’semissionsreductionoverthe

2020-2035intervalwouldexceeditscostbyafactorofmorethanfive.Includingthehealthbenefitsfromimprovedlocalairqualityincreasestheestimatedbenefit-costratioto26.

8

TheseratiosapplywhenweemploytheBidenadministration’sestimatesofthe“socialcostofcarbon”(SCC)—thediscountedclimatebenefitfroman

7See,forexample,Becker(2023/)andYuetal.(2022).

8TheclimatebenefitsfromCO2reductionsare6–43trillionRMBunderaplausiblerangeof

valuesfortheSCC,modelparameters,andpolicystringencyoverthe2020–2035interval.

Whenhealthco-benefitsareconsidered,theTPS’stotalenvironmentalbenefitsare19–122

trillionRMB,with53trillionasthecentralestimate.Thiscompareswitheconomiccostsof1–3trillionRMBunderthesamerangeofmodelparametersandpolicystringency(seeSection6.3).

China’sNationwideCO2EmissionsTradingSystem:AGeneralEquilibriumAssessment

4

incrementalreductioninCO2emissions.RecentstudiesobtainconsiderablylargerestimatesoftheSCC.Employingtheseestimatesyieldsconsiderablyhigherbenefit-costratios.

9

Second,theplannedstringencyofChina’sTPSislessthantheefficiency-maximizinglevel.Efficiencymaximizationrequiresthatmarginalabatementcostequalmarginalenvironmentalbenefit.Ourresultsindicatethatoverthe2020-2035interval,the

averagediscountedmarginalcostofabatement

10

iswellbelowthecentralestimatesbytheBidenadministrationofthemarginalbenefitsfromemissionsabatementduringthisinterval,asexpressedbytheSCC.WiththeBidenadministration’sSCCestimates,efficiencymaximizationwouldcallforbenchmarksthatare9percenttighterthanthecurrentandplannedbenchmarksundertheTPS.Usingtheefficiency-maximizing

benchmarkswouldleadtoemissionsreductionsovertheintervalthataretwiceaslargeaswhatseemslikelytoresultfromthecurrentandprojectedbenchmarksoverthisinterval.UsingthehigherSCCestimatesfromrecentstudieswouldcallforstillgreaterstringencyandassociatedemissionsreductions.

Third,therelativecostsoftheTPSandanequivalentC&Tsystemchange

significantlyovertime.Intheearlyyears,theTPS’scostsareonlyslightlyhigherthanthoseofanequivalentlystringentC&Tsystem,butitscostdisadvantagebecomes

moresignificantovertime.Weidentifythreefactorsthatexplainthispattern,twoof

whichhavenotbeenrecognized.ThefactorrecognizedintheliteraturealludestotheTPS’smethodforallowanceallocation.TheTPSimplicitlysubsidizesintendedoutput,ascoveredfacilitiesreceivefreeallowancesforeachadditionalunitofproduction.Thesubsidycausescoveredfirmstorelytoolittle(fromanefficiencypointofview)on

output-reductiontoachievecompliance,asreducingoutputimpliesareduced

allowanceallocation.ThisfactorhandicapstheTPSrelativetoC&T,whichincludesnosuchsubsidy.Thispaperrevealstwoadditionalandsignificantdeterminantsofthe

TPS’sabsoluteandrelativecosts.First,theTPS’sexcesscostoverC&Tincreaseswiththestringencyoftheemissions-reductiontarget.Increasedstringencyleadstohigherallowanceprices,which,asshown,givesgreaterimportancetotheTPS’simplicit

subsidy.ThisexplainstheobservedgrowinggapovertimeintheTPS’saggregate

abatementcostrelativetotheaggregatecostunderC&Tasstringencyincreasesandallowancepricesrise.Second,therelativecostsalsodependontheextentofpre-

9Rennertetal.(2022)estimatetheSCC(evaluatedin2020)tobe1,277RMB(185USdollars)pertonofCO2;CarletonandGreenstone(2022)suggestusing863RMB(125USdollars)pertonofCO2.TheserecentestimationsaremuchhigherthantheBidenadministration’scentralestimateof353RMB(51USdollars)perton.

10WeobtaintheeconomywidemarginalcostbyevaluatingthecumulativeeconomywidecostfromanincrementaltighteningofbenchmarksrelativetotheirvaluesundertheTPSinthe

centralcase.Specifically,theaveragemarginalcostpertonisthepresentvalueofcumulativechangeinGDPover2020–2035dividedbytheassociatedcumulativechangeinemissions

relativetothebaseline,usinganannualdiscountrateof5percent.Theeconomywidemarginalcostofabatementisdifferentfromt