IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change Policy studies for China

The ERI (2003) report on three alternatives for China’s development to 2020 presents effects of policies that reduce CO2 emissions in a ‘green growth’ scenario. For the same GDP growth of 7% per year, policies of accelerated economic reform, increased energy efficiency standards, higher taxes on vehicle fuels and more use of low-carbon technologies in power generation reduce the growth of CO2 to 1.7% per year compared to 3.6% per year in an ‘ordinary effort’ scenario.

Chen (2005) presents a comparison of assumed marginal abatement cost curves and GDP costs associated with various reduction efforts in China in different models (see Figure 11.6 and Table 11.12 below). Chen (p. 891) discusses the reasons for the differences, which are largely due to differences in baselines and assumptions about available technologies and substitution between fossil and non-fossil energy. GDP costs for 2010 vary: 0.2 and 1.5% reduction compared to baseline, associated with a 20% reduction in CO2 compared to baseline. Garbaccio et al. (1999) consider smaller CO2 reductions – between 5 and 15% – and find not only lower costs, but potentially positive GDP effects after only a few years owing to a double-dividend effect.

Figure 11.6

Figure 11.6: A comparison of Marginal Abatement Curves for China in 2010 from different models

Source: adapted from Chen (2005, p. 891)

Table 11.12: A comparison of GDP loss rates for China across models in 2010

Model Emission reduction compared to baseline (%) Marginal carbon abatement cost ((2000)US$/tCO2) GDP (GNP) loss relative to baseline (%) 
GLOBAL 2100 20 25 1.0 
 30 50 1.9 
GREEN 20 0.3 
 30 0.5 
Zhang’s CGE model 20 1.5 
 30 13 2.8 
China MARKAL-MACRO 20 18 0.7 
 30 22 1.0 
 40 35 1.7 

Notes: Marginal carbon abatement costs were originally measured at 1990 prices in GLOBAL 2100, at 1985 prices in GREEN, at 1987 prices in Zhang’s CGE model, and at 1995 prices in China MARKAL-MACRO. They were converted to 2000 prices for comparison with other carbon prices in the chapter.

Source: adapted from Chen (2005, p.894)