2019
Jaume Freire-González and Mun S. Ho. 2019. “
Carbon taxes and the double dividend hypothesis in a recursive-dynamic CGE model for Spain.” Economic Systems Research, 31, 2, Pp. 267-284.
Publisher's VersionAbstractA carbon tax is potentially a policy that can reduce CO2 emissions and mitigate climate risks, at lowest economy-wide costs. We develop a dynamic CGE model for Spain to assess the economic and environmental effects of a carbon tax, and test the double dividend (DD) hypothesis. We simulate the impact of three carbon taxes: €10, €20 and €30 per ton of CO2. For each tax, four ‘revenue recycling’ scenarios are examined: a reduction of taxes on capital, on labor, on value-added tax, and a scenario in which revenues are not recycled. We find a DD for taxes of €10/ton and lower, within five to seven years of implementation. We estimate an annual CO2 emissions reduction of around 10% with this tax. Under some circumstances, the DD can be achieved for a tax of €20/ton. In any case, recycling revenues to cut pre-existing taxes reduces costs of imposing carbon taxes.
Jing Cao, Mun S. Ho, Dale W. Jorgenson, and Chris P. Nielsen. 2019. “
China’s emissions trading system and an ETS-carbon tax hybrid.” Energy Economics, 81, June, Pp. 741-753.
Publisher's VersionAbstractChina is introducing a national carbon emission trading system (ETS), with details yet to be finalized. The ETS is expected to cover only the major emitters but it is often argued that a more comprehensive system will achieve the emission goals at lower cost. We first examine an ETS that covers both electricity and cement sectors and consider an ambitious cap starting in 2017 that will meet the official objective to reduce the carbon-GDP intensity by 60-65% by 2030 compared to 2005 levels. The two ETS-covered industries are compensated with an output-based subsidy to represent the intention to give free permits to the covered enterprises. We then consider a hybrid system where the non-ETS sectors pay a carbon tax and share in the CO2 reduction burden. Our simulations indicate that hybrid systems will achieve the same CO2 goals with lower permit prices and GDP losses. We also show how auctioning of the permits improves the efficiency of the ETS and the hybrid systems. Finally, we find that these CO2 control policies are progressive in that higher incomes households bear a bigger burden.
Appendix Jing Cao, Mun S. Ho, Yating Li, Richard G. Newell, and William A. Pizer. 2019. “
Chinese residential electricity consumption estimation and forecast using micro-data.” Resource and Energy Economics, 56, May, Pp. 6-27.
Publisher's VersionAbstractBased on econometric estimation using data from the Chinese Urban Household Survey, we develop a preferred forecast range of 85–143 percent growth in residential per capita electricity demand over 2009–2025. Our analysis suggests that per capita income growth drives a 43% increase, with the remainder due to an unexplained time trend. Roughly one-third of the income-driven demand comes from increases in the stock of specific major appliances, particularly AC units. The other two-thirds comes from non-specific sources of income-driven growth and is based on an estimated income elasticity that falls from 0.28 to 0.11 as income rises. While the stock of refrigerators is not projected to increase, we find that they contribute nearly 20 percent of household electricity demand. Alternative plausible time trend assumptions are responsible for the wide range of 85–143 percent. Meanwhile we estimate a price elasticity of demand of −0.7. These estimates point to carbon pricing and appliance efficiency policies that could substantially reduce demand.
Ran Hao, Tianguang Lu, Qiuwei Wu, Xinyu Chen, and Qian Ai. 2019. “
Distributed piecewise approximation economic dispatch for regional power systems under non-ideal communication.” IEEE Access, 7, Pp. 45533-45543.
Publisher's VersionAbstractAppropriate distributed economic dispatch (DED) strategies are of great importance to manage wide-area controllable generators in wide-area regional power systems. Compared with existing works related to ED, where dispatch algorithms are carried out by a centralized controller, a practical DED scheme is proposed in this paper to achieve the optimal dispatch by appropriately allocating the load to generation units while guaranteeing consensus among incremental costs. The ED problem is decoupled into several parallel sub-problems by the primal-dual principle to address the computational issue of satisfying power balance between the demand and the supply from the distributed regional power system. The feasibility test and an innovative mechanism for unit commitment are then designed to handle extreme operation situations, such as low load level and surplus generation. In the designed mechanism, the on/off status of units is determined in a fully distributed framework, which is solved using the piecewise approximation method and the discrete consensus algorithm. In the algorithm, the push-sum protocol is proposed to increase the system adaptation on the time-varying communication topology. Moreover, consensus gain functions are designed to ensure the performance of the proposed DED under communication noise. Case studies on a standard IEEE 30-bus system demonstrate the effectiveness of our proposed methodology
IEEE_Full_Text Lin Zhou, Jianglong Li, Yangqing Dan, Chunping Xie, Houyin Long, and Hongxun Liu. 2019. “
Entering and exiting: Productivity evolution of energy supply in China.” Sustainability, 11, 983.
Publisher's VersionAbstractThe continuous entry of new firms and exit of old ones might have substantial effects on productivity of energy supply. Since China is the world’s largest energy producer, productivity of energy supply in China is a significant issue, which affects sustainability. As a technical application, this paper investigates the productivity and dynamic changes of Chinese coal mining firms. We find that the total factor productivity (TFP) growth of coal supply in China is largely lagging behind the growth rate of coal production. The entry and exit of non-state-owned enterprise (non-SOE) partially provide explanation for the dynamic change of aggregate TFP. Specifically, non-state owned entrants induced by the coal price boom after 2003, which had negative effects on TFP of energy supply, while the exit of non-SOEs had positive effects. Furthermore, there is regional heterogeneity concerning the effects of entry and exit on energy supply productivity. More entrants induced by coal price boom are concentrated in non-main production region (non-MPR), while more exits are located in MPR due to the government’s enforcement. This provides explanation for the phenomena that productivity of energy supply in MPR gradually surpasses that in non-MPR. We also anticipate our paper to enhance understanding on the energy supply-side, which might further help us make informed decisions on energy planning and environmental policies.
Hongxun Liu, Kerui Du, and Jianglong Li. 2019. “
An improved approach to estimate direct rebound effect by incorporating energy efficiency: A revisit of China's industrial energy demand.” Energy Economics, 80, May, Pp. 720-730.
Publisher's VersionAbstractThe rebound effect, or the response to energy efficiency improvement, has drawn considerable attention from economists and policymakers. However, the magnitude remains quite controversial because of the differences in the definitions and methods being used. Originating from the definition of direct rebound effect, we develop an improved approach incorporating energy efficiency. The main advantages of the proposed approach are twofold. First, it enables us to estimate the demand elasticity of useful energy service with respect to energy service price. The estimates are more consistent with the definition of rebound effect and are more effective. Second, it decomposes direct rebound effect into substitution and output channels, enabling us to further understand the microeconomic mechanisms. Applying this method, we assess the direct energy rebound effect in China’s industrial sectors. We find that the direct rebound effect for the industry is 37.0%, and the substitution and output channels contribute to 13.1% and 23.9%, respectively. Substantial variations in the magnitudes and mechanisms occur by sector. For heavy industry, most energy rebound is induced by output expansion because of its sizeable cost decrease from efficiency improvements. Unlike heavy industry, most energy rebound in light industry comes from substituting energy service for other inputs because firms in light industry are more flexible in adjusting production inputs. Our results provide evidences for the importance of energy efficiency measures, and highlight the necessity of differentiated measures according to the sectoral characteristics.
James K. Hammitt, Fangli Geng, Xiaoqi Guo, and Chris P. Nielsen. 2019. “
Valuing mortality risk in China: Comparing stated-preference estimates from 2005 and 2016.” Journal of Risk & Uncertainty, 58, Pp. 167–186.
Publisher's VersionAbstractWe estimate the marginal rate of substitution of income for reduction in current annual mortality risk (the “value per statistical life” or VSL) using stated-preference surveys administered to independent samples of the general population of Chengdu, China in 2005 and 2016. We evaluate the quality of estimates by the theoretical criteria that willingness to pay (WTP) for risk reduction should be strictly positive and nearly proportional to the magnitude of the risk reduction (evaluated by comparing answers between respondents) and test the effect of excluding respondents whose answers violate these criteria. For subsamples of respondents that satisfy the criteria, point estimates of the sensitivity of WTP to risk reduction are consistent with theory and yield estimates of VSL that are two to three times larger than estimated using the full samples. Between 2005 and 2016, estimated VSL increased sharply, from about 22,000 USD in 2005 to 550,000 USD in 2016. Income also increased substantially over this period. Attributing the change in VSL solely to the change in real income implies an income elasticity of about 3.0. Our results suggest that estimates of VSL from stated-preference studies in which WTP is not close to proportionate to the stated risk reduction may be biased downward by a factor of two or more, and that VSL is likely to grow rapidly in a population with strong economic growth, which implies that environmental-health, safety, and other policies should become increasingly protective.
2018
Yaowen Zhang, Ling Shao, Xudong Sun, Mengyao Han, Xueli Zhao, Jing Meng, Bo Zhang, and Han Qiao. 2018. “
Outsourcing natural resource requirements within China.” Journal of Environmental Management, 228, Pp. 292-302.
Publisher's VersionAbstractConsumption demands are final drivers for the extraction and allocation of natural resources. This paper investigates demand-driven natural resource requirements and spatial outsourcing within China in 2012 by using the latest multi-regional input-output model. Exergy is adopted as a common metric for natural resources input. The total domestic resource exergy requirements amounted to 125.5 EJ, of which the eastern area contributed the largest share of 44.5%, followed by the western area (23.9%), the central area (23.0%) and the northeastern area (8.6%). Investment was the leading final demand category, accounting for 52.9% (66.4 EJ) of national total embodied resource use (ERU). The total trade volumes of embodied resource were equivalent to 69.6% of the total direct resource input (DRI), mostly transferred from the central and western regions such as Inner Mongolia, Shanxi, Shaanxi and Xinjiang to the eastern regions such as Jiangsu, Zhejiang, Guangdong and Shanghai. The northeastern and eastern areas had physical net imports of 1213.5 PJ and 38452.6 PJ, while the central and western inland areas had physical net exports of 6364.5 PJ and 33301.5 PJ, respectively. Shanghai, Beijing, Zhejiang, Jiangsu and Guangdong had prominent ERUs which respectively were 101.6, 12.6, 11.7, 8.4 and 4.3 times of their DRIs. The ERUs of Inner Mongolia, Shaanxi, Shanxi, Ningxia and Guizhou were equal to only 17.6%, 25.3%, 27.9%, 46.0% and 50.2% of their DRIs, respectively. Regional uneven development resulted in imbalanced resource requirements across China. The findings can provide a deep understanding of China's resource-driven economic development mode, and contribute to reducing regional resource footprints and their environment outcomes under the “new normal economy”.
Rong Ma, Bin Chen, Chenghe Guan, Jing Meng, and Bo Zhang. 2018. “
Socioeconomic determinants of China’s growing CH4 emissions.” Journal of Environmental Management, 228, 15 December 2018, Pp. 103-116.
Publisher's VersionAbstractReducing CH4 emissions is a major global challenge, owing to the world-wide rise in emissions and concentration of CH4 in the atmosphere, especially in the past decade. China has been the greatest contributor to global anthropogenic CH4 emissions for a long time, but current understanding towards its growing emissions is insufficient. This paper aims to link China's CH4 emissions during 2005–2012 to their socioeconomic determinants by combining input-output models with structural
decomposition analysis from both the consumption and income perspectives. Results show that changes in household consumption and income were the leading drivers of the CH4 growth in China, while changes in efficiency remained the strongest factor offsetting CH4 emissions. After 2007, with the
global financial crisis and economic stimulus plans, embodied emissions from exports plunged but those from capital formation increased rapidly. The enabled emissions in employee compensation increased steadily over time, whereas emissions induced from firms' net surplus decreased gradually, reflecting the reform on income distribution. In addition, at the
sectoral level, consumption and capital formation respectively were the greatest drivers of embodied CH4 emission changes from agriculture and manufacturing, while employee compensation largely determined the enabled emission changes across all industrial sectors. The growth of CH4 emissions in China was profoundly affected by the
macroeconomic situation and the changes of economic structure. Examining economic drivers of anthropogenic CH4emissions can help formulate comprehensive mitigation policies and actions associated with economic production, supply and consumption.
Govinda R. Timilsina, Jing Cao, and Mun S. Ho. 2018. “
Carbon tax for achieving China's NDC: Simulations of some design features using a CGE model.” Climate Change Economics, 9, 3.
Publisher's VersionAbstractChina has set a goal of reducing its CO2 intensity of GDP by 60–65% from the 2005 level in 2030 as its nationally determined contribution (NDC) under the Paris Climate Change Agreement. While the government is considering series of market and nonmarket measures to achieve its target, this study assesses the economic consequences if the target were to meet through a market mechanism, carbon tax. We used a dynamic computable general equilibrium model of China for the analysis. The study shows that the level of carbon tax to achieve the NDC target would be different depending on its design features. An increasing carbon tax that starts at a small rate in 2015 and rises to a level to meet the NDC target in 2030 would cause smaller GDP loss than the carbon tax with a constant rate would do. The GDP loss due to the carbon tax would be smaller when the tax revenue is utilized to cut existing distortionary taxes than when it is transferred to households as a lump-sum rebate.
Jaume Freire-González and Mun S. Ho. 2018. “
Environmental fiscal reform and the double dividend: evidence from a dynamic general equilibrium model.” Sustainability, 10, 2.
Publisher's VersionAbstractAn environmental fiscal reform (EFR) represents a transition of a taxation system toward one based in environmental taxation, rather than on taxation of capital, labor, or consumption. It differs from an environmental tax reform (ETR) in that an EFR also includes a reform of subsidies which counteract environmental policy. This research details different ways in which an EFR is not only possible but also a good option that provides economic and environmental benefits. We have developed a detailed dynamic CGE model examining 101 industries and commodities in Spain, with an energy and an environmental extension comprising 31 pollutant emissions, in order to simulate the economic and environmental effects of an EFR. The reform focuses on 39 industries related to the energy, water, transport and waste sectors. We simulate an increase in taxes and a reduction on subsidies for these industries and at the same time we use new revenues to reduce labor, capital and consumption taxes. All revenue recycling options provide both economic and environmental benefits, suggesting that the “double dividend” hypothesis can be achieved. After three to four years after implementing an EFR, GDP is higher than the base case, hydrocarbons consumption declines and all analyzed pollutants show a reduction.
Xiaolin Guo, Mun Sing Ho, Liangzhi You, Jing Cao, Yu Fang, Taotao Tu, and Yang Hong. 2018. “
Industrial water pollution discharge taxes in China: A multi-sector dynamic analysis.” Water, 10, 12, Pp. 1742.
Publisher's VersionAbstractWe explore how water pollution policy reforms in China could reduce industrial wastewater pollution with minimum adverse impact on GDP growth. We use a multi-sector dynamic Computable General Equilibrium (CGE) model, jointly developed by Harvard University and Tsinghua University, to examine the long-term impact of pollution taxes. A firm-level dataset of wastewater and COD discharge is compiled and aggregated to provide COD-intensities for 22 industrial sectors. We simulated the impact of 4 different sets of Pigovian taxes on the output of these industrial sectors, where the tax rate depends on the COD-output intensity. In the baseline low rate of COD tax, COD discharge is projected to rise from 36 million tons in 2018 to 48 million in 2030, while GDP grows at 6.9% per year. We find that raising the COD tax by 8 times will lower COD discharge by 1.6% by 2030, while a high 20-times tax will cut it by 4.0%. The most COD-intensive sectors—textile goods, apparel, and food products—have the biggest reduction in output and emissions. The additional tax revenue is recycled by cutting existing taxes, including taxes on profits, leading to higher investment. This shift from consumption to investment leads to a slightly higher GDP over time.
Bo Zhang, Yaowen Zhang, Xueli Zhao, and Jing Meng. 2018. “
Non-CO2 greenhouse gas emissions in China 2012: Inventory and supply chain analysis.” Earth's Future, 6, 1.
Publisher's VersionAbstractReliable inventory information is critical in informing emission mitigation efforts. Using the latest officially released emission data, which is production based, we take a consumption perspective to estimate the non-CO2 greenhouse gas (GHG) emissions for China in 2012. The non-CO2 GHG emissions, which cover CH4, N2O, HFCs, PFCs, and SF6, amounted to 2003.0 Mt. CO2-eq (including 1871.9 Mt. CO2-eq from economic activities), much larger than the total CO2 emissions in some developed countries. Urban consumption (30.1%), capital formation (28.2%), and exports (20.6%) derived approximately four fifths of the total embodied emissions in final demand. Furthermore, the results from structural path analysis help identify critical embodied emission paths and key economic sectors in supply chains for mitigating non-CO2 GHG emissions in Chinese economic systems. The top 20 paths were responsible for half of the national total embodied emissions. Several industrial sectors such as Construction, Production and Supply of Electricity and Steam, Manufacture of Food and Tobacco and Manufacture of Chemicals, and Chemical Products played as the important transmission channels. Examining both production- and consumption-based non-CO2 GHG emissions will enrich our understanding of the influences of industrial positions, final consumption demands, and trades on national non-CO2 GHG emissions by considering the comprehensive abatement potentials in the supply chains.
zhang_et_al-2018-earths_future.pdf Bo Zhang, Shihui Guan, Xiaofang Wu, and Xueli Zhao. 2018. “
Tracing natural resource uses via China's supply chains.” Journal of Cleaner Production, 196, Pp. 880-888.
Publisher's VersionAbstractThis paper makes an in-depth analysis on demand-driven natural resource requirements in China via the methods of thermodynamic input-output analysis and structural path analysis, in order to reveal the connections between the country's rapid economic development and its intensive use of natural resources. The main natural resources investigated include crops, forestry, rangeland, aquatic products, coal, crude oil & natural gas, ferrous metal ores, nonferrous metal ores, nonmetallic minerals and other primary energy, and exergy is adopted as a common metric for the resource accounting. In 2012, the total domestic resource exergy input into Chinese economic system amounted to 130.1 EJ, of which 44.6% was induced by investment demands. The embodied resource use (ERU) in China's exports was equivalent to over one fifth of its domestic resource supply. The two integrative sectors of Manufacturing and Construction accounted for 44.1% and 28.7% of the national total ERU, respectively. We identified critical supply chain paths starting from resource extraction to final demand, as well as key industrial sectors in driving the extraction, transmission and final use of embodied resources. The top 50 paths were responsible for 30.4 EJ of the ERU. The identification of resource supply chains from a systemic perspective is of great importance when resource and environmental policies are to be applied to concrete industrial sectors and other economic agents. Integrated approaches that take account of consumption-based resource indicators should be developed for resource conservation and cleaner production, particularly for the economic system with a complex supply network.
2017
Changyi Liu, Yang Wang, and Rong Zhu. 2017. “
Assessment of the economic potential of China's onshore wind electricity.” Resources, Conservation and Recycling, 121, Pp. 33-39.
Publisher's VersionAbstractThe assessment of the economic potential of wind electricity is of critical importance for wind power development in China. Based on the wind resource data between 1995 and 2014 and geological assumptions, this paper calculates economic potential of China’s onshore wind electricity. Furthermore, it builds an econometric model to update the net-present-value model, based on a survey sample of various wind farms. Results show that the economic potential of China’s onshore wind electricity is 8.13 PWh per year with a feed-in-tariff price at 0.60 yuan (about 9.6 U.S. cents) per kilowatt-hour.
Haikun Wang, Yanxu Zhang, Xi Lu, Weimo Zhu, Chris P. Nielsen, Jun Bi, and Michael B. McElroy. 2017. “
Trade‐driven relocation of air pollution and health impacts in China.” Nature Communications, 8, 738.
Publisher's VersionAbstractRecent studies show that international trade affects global distributions of air pollution andpublic health. Domestic interprovincial trade has similar effects within countries, but has notbeen comprehensively investigated previously. Here we link four models to evaluate theeffects of both international exports and interprovincial trade on PM2.5pollution and publichealth across China. We show that 50–60% of China’s air pollutant emissions in 2007 wereassociated with goods and services consumed outside of the provinces where they wereproduced. Of an estimated 1.10 million premature deaths caused by PM2.5pollutionthroughout China, nearly 19% (208,500 deaths) are attributable to international exports. Incontrast, interprovincial trade leads to improved air quality in developed coastal provinceswith a net effect of 78,500 avoided deaths nationwide. However, both international exportand interprovincial trade exacerbate the health burdens of air pollution in China’s lessdeveloped interior provinces. Our results reveal trade to be a critical but largely overlookedconsideration in effective regional air quality planning for China.
Nan Zhong, Jing Cao, and Yuzhu Wang. 2017. “
Traffic congestion, ambient air pollution and health: Evidence from driving restrictions in Beijing.” Journal of the Association of Environmental and Resource Economists, 4, 3, Pp. 821–856.
Publisher's VersionAbstract
Vehicles have recently overtaken coal to become the largest source of air pollution in urban China. Research on mobile sources of pollution has foundered due both to inaccessibility of Chinese data on health outcomes and strong identifying assumptions. To address these, we collect daily ambulance call data from the Beijing Emergency Medical Center and combine them with an idiosyncratic feature of a driving restriction policy in Beijing that references the last digit of vehicles’ license plate numbers. Because the number 4 is considered unlucky by many in China, it tends to be avoided on license plates. As a result, days on which the policy restricts license plates ending in 4 unintentionally allow more vehicles in Beijing. Leveraging this variation, we find that traffic congestion is indeed 22% higher on days banning 4 and that 24-hour average concentration of NO2 is 12% higher. Correspondingly, these short term increases in pollution increase ambulance calls by 12% and 3% for fever and heart related symptoms, while no effects are found for injuries. These findings suggest that traffic congestion has substantial health externalities in China but that they are also responsive to policy.
