Impact of Carbon Emission Reduction on the Economy and Energy Consumption in China Based on the CGE Model

Abstract

In this paper, the computable general equilibrium (CGE) model has been established to study the impact of carbon emission reduction on the energy consumption structure of China. The simulation results show that carbon emission reduction would lead to the decrease of China's GDP and public welfare and that the total energy consumption can be reduced, but to a lesser degree than coal and oil consumption. In addition, the degree of reduction in relation to rural residents is greater than that for urban residents. Furthermore, the production costs of enterprises will increase and enterprises are prone to adopt the cheaper natural gas and electricity to substitute for partial coal and oil. This study aims to provide insightful information on carbon emission reduction for policymakers in China.