1. Emissions
Intensity
Targe0ng:
From
China's
12th
Five
Year
Plan
to
its
Copenhagen
Commitment
Yingying
Lu
Centre
for
Applied
Macroeconomic
Analysis
Crawford
School
of
Public
Policy
2012
Crawford
PhD
conference,
November
27,
2012

2. Mo?va?on
In
2010,
energy
related
CO2
emissions
from
China,
accounted
for
a
quarter
of
the
world
total.
China
is
currently
the
world’s
largest
single
source
of
fossil
fuel
related
CO2
emissions.
Source:
EIA
staDsDcs.

3. Mo?va?on
• China’s
Response
– Interna?onal
commitment:
the
Copenhagen
Commitment
• By
2020,
emissions
intensity
reduced
by
40%-­‐45%
rela0ve
to
2005
– Domes?c
commitment:
the
12th
Five-­‐Year-­‐Plan
• By
2015,
emissions
intensity
reduced
by
17%
rela0ve
to
2010

4. Mo?va?on
2010 2015 2020
Start
of
12-­‐5YP
End
of
12-­‐5YP
12-­‐5YP
emissions
intensity
reduc0on
target
Copenhagen
emissions
intensity
reduc0on
target
Cut-­‐off
of
Copenhagen
Accord
 If
both
targets
are
just
met….
 Emissions
intensity
VS.
emissions
level
 Future
uncertain?es
2012
Regime
transi0on
Mr.
Hu Mr.
Xi

5. Research
Ques?ons
• How
stringent
are
the
two
targets
in
terms
of
absolute
emissions
reduc?ons?
• What
is
the
rela?onship
between
China’s
2015
domes?c
commitment
and
its
2020
Copenhagen
commitment?
•
What
are
the
policy
implica?ons
of
targe?ng
emissions
intensity?
How
do
these
differ
from
emissions
level
targe?ng?
• How
to
appropriately
model
intensity
targets,
par?cularly
when
future
uncertainDes
are
important?

6. Modelling
Approach
• G-­‐Cubed
model
(developed
by
McKibbin
&
Wilcoxen)
– Version
108E:
9
regions,
12
sectors
(6
energy
sectors)
• Assump?ons
about
climate
policy
– In
the
form
of
carbon
tax
– A
par?cular
rule
of
carbon
tax
path:
increase
by
4%
each
year
– Recycling
of
carbon
tax
revenues
• Policy
simula?on
algorithm

7. Baseline
Projec?on-­‐-­‐China
Real
GDP
projec?ons CO2
emissions
projec?ons
CO2
emissions
intensity
projec?ons

8. Policy
Scenarios
2013
Scenario
CH20
2013
Scenario
CH1520_Q
2015 2020
Tax
path
from
CH1520
?ll
2015
Cumula?ve
emissions
over
2013-­‐2020
from
CH20
Just
hit!
Just
hit! Just
hit!
2020
Intensity
Target
2015
Intensity
Target
2013
Scenario
CH1520
2020
Intensity
Target

9. Results:
Carbon
Tax
Path
Source: Policy simulations from G-Cubed (version 108E).
Carbon
tax
paths
from
all
the
policy
scenarios
under
baseline
A
tax
rate
jump
under
the
par0cular
policy
rule!

10. Results:
GDP
and
Emissions
Devia?ons
of
real
GDP
rela?ve
to
baseline
Devia?ons
of
emissions
rela?ve
to
baseline
Source: Policy simulations from G-Cubed (version 108E).
 Less
cumula?ve
emissions
reduced
in
CH1520
 Less
cumula?ve
GDP
loss
in
CH1520
 But
targe?ng
cumula?ve
emissions
(CH1520_Q)
will
incur
more
GDP
loss.

11. Sensi?vity
Analysis:
Baseline
Assump?ons
Emissions
intensi?es
based
on
different
baseline
assump?ons
CH1520
scenarios
based
on
different
baselines
Source: Policy simulations from G-Cubed (version 108E).
The
results
are
qualita?vely
robust
with
different
baseline
assump?ons.

12. Sensi?vity
Analysis:
Unexpected
shocks
Source: Policy simulations from G-Cubed (version 108E).
In
high-­‐growth
periods,
the
policy
is
eased
under
emissions
intensity
targe?ng.
In
low-­‐growth
periods,
an
intensity
target
further
restricts
the
emissions
growth.

13. Thank you for your attention!

14. Policy
simula?on
algorithm