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This paper examined the economic impacts of China's emissions trading system (ETS), implemented in 2013, in terms of gross domestic product (GDP) and per capita GDP. The methodology drew on a difference-in-differences (DID) method using dynamic panel data for 30 provincial regions. The estimation results show that implementing an ETS policy has statistically significant negative effects on economic growth. When considering the additional control variables, these effects are still statistically significant. Furthermore, these negative impacts increase over time with respect to both GDP and per capita GDP. The counterfactual tests confirm the robustness of our DID estimation results. The specific influence mechanism of China's ETS policy was finally discussed. Our findings provide a quantitative decision-making support for popularizing ETS policy in China. Based on our DID model, empirical investigations of the ETS policy, especially concerning economic growth in other regions would produce prolific contributions to the literature. [ABSTRACT FROM AUTHOR]

A reduction in the CO2 emission intensity (ton per gross domestic product) from a base year to a target year with different rates of reduction in each individual year can yield different cumulative CO2 emissions over time, which could have different effects on the climate. In this paper, an indicator is proposed to measure the extent to which the cumulative CO2 emissions are generated by a specific reduction trajectory of CO2 emission intensity, especially for emerging economies with a relatively higher economic growth rate. The proposed indicator is important for less-developed countries and regions in which economic growth is heavily reliant on energy and in which significant potential exists for improvement of energy efficiency. The indicator is applied to evaluate the CO2 emission reduction performance in China's 12th Five-Year Plan period, and the result is not encouraging, especially when the likely gap between the energy conservation goals and temperature goals is further examined. Mitigation goals should be set by considering not only the performance in the final year, but also the reduction in cumulative emissions over the evaluation period. [ABSTRACT FROM AUTHOR]

In December 2015, China joined 190 plus nations at Paris in committing to the goal of limiting the rise in global average temperature to ‘well below’ 2°C. Carbon budget analysis indicates that goal will require not only that the European Union and US reduce their emissions by greater than 80% by 2050, but that China at least comes close to doing so as well, if any budget is to be left over for the rest of the world (RoW). Given that RoW emissions are, and will come from, low-income and emerging nations, China’s emission reduction potential is of no small consequence. In this paper, we use the Kaya identity to back out changes in the drivers of CO2 emissions, including gross domestic product (GDP), energy intensity (E/GDP) and the carbon content of energy (C/E), the latter two calculated to be consistent with China’s long-term GDP growth rate forecasts and specified 2050 CO2 emission reduction targets. Our results suggest that even achieving China’s highly optimistic renewable energy targets will be very far from sufficient to reduce China’s CO2 emissions from 9.1 Gt it emitted in 2015 to much below 3 Gt by 2050. Even reducing its emissions to 5 Gt will be challenging, yet this falls far short of what is needed if the world is to meet its ‘well below’ 2°C commitment. Key policy insights Under the Paris Agreement there is great pressure on China to very substantially reduce its emissions by 2050. While China has attached great importance to renewables and nuclear energy development, even achieving the most optimistic targets would not be sufficient to reduce China’s emissions from 9.1 Gt in 2015 to much below 3 Gt by 2050. China’s emission reduction potential falls far short of what is needed if the world is to meet its Paris ‘well below’ 2°C commitment, even if the EU and US reduce their emissions to zero by 2050. Emission cuts consistent with the Paris Agreement will require that China and the world give much greater weight to advancing research and development of scalable low-, zero- and negative-carbon sources and technologies. [ABSTRACT FROM AUTHOR]