Our Common Future Under Climate Change

International Scientific Conference 7-10 JULY 2015 Paris, France

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Thursday 9 July - 16:30-18:00 UNESCO Fontenoy - ROOM XI

3333 - China’s climate policies and low-carbon innovation

Parallel Session

Lead Convener(s): S. Geall (University of Sussex, Brighton, United Kingdom), F. Jotzo (Australian National University, Canberra, Australia)

Convener(s): A. Loeschel (Department of Economics, Muenster, Germany)

16:30

The Economic Benefits of Decarbonization for China

F. Teng (Tsinghua University, Beijing, China)

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The Economic Benefits of Decarbonization for China

F. Teng (1)
(1) Tsinghua University, Institute of energy, environment and economy, Beijing, China

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China needs to reduce its carbon emissions if global climate change mitigation is to succeed. Conventional economic analysis views cutting emissions as a cost, creating a collective action problem. However, decarbonization can improve productivity and provide co-benefits that accord with multiple national policy objectives. Investment in greater energy productivity and economic restructuring away from heavy industries can bring productivity gains, and decarbonization of energy supply has important co-benefits for air pollution and energy security. To properly identify the true costs and benefits of climate change action requires new thinking in economic analysis. This presentation draws on recent academic papers as well as research contributions to the New Climate Economy report and the global Deep Decarbonization Pathways project.

16:40

Challenges and opportunities for renewable energy development in China

S. Li (Alexander von Humboldt Fellow, Berlin, Germany)

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Challenges and opportunities for renewable energy development in China

S. Li (1)
(1) Alexander von Humboldt Fellow, Berlin, Germany

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China's rapid renewable energy deployment is increasingly well known. The country has set out ambitious targets for wind and solar and is well on track to deliver them. However, this robust development should not be taken for granted over the next few years. As more renewable energy enters into China's power system, energy integration is emerging as the biggest headache faced by the industry. Already over the past few years, while China was busy adding new installations, its existing renewable power plants were curtailed severely. The root cause is China's electricity market design which favors strongly baseload capacity and gives little incentive to clean but fluctuating generation sources. The degree to which China could further reform its aging power market will therefore largely determine whether the country can continue to unleash its immense renewable energy potential.

16:50

Lessons from climate change and energy policy in Western countries

F. Jotzo (Australian National University, Canberra, Australia), A. Loeschel (University of münster, Münster, Germany), X. Labandeira (European University Institute, Florence, Italy)

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Lessons from climate change and energy policy in Western countries

F. Jotzo (1) ; A. Loeschel (2) ; X. Labandeira (3)
(1) Australian National University, Crawford School of Public Policy, Canberra, Australia; (2) University of münster, Center of applied economic research münster (cawm), Münster, Germany; (3) European University Institute, And university of vigo, spain, Florence, Italy

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China is planning a national emissions trading scheme and to expand and reform other policy approaches to curb greenhouse gas emissions. Valuable lessons have been learned in Western countries about the design of emissions trading schemes, as well as other policy approaches such as feed-in tariffs for renewable energy and mechanisms to support energy efficiency. Some of the lessons are universal, allowing China to avoid costly mistakes made in Europe and elsewhere. Others are specific to the context, and effective climate policy instruments for China may look quite different from what works in market economies. In this session we point out key lessons for China from Europe, the United States and Australia. We draw on our own research bridging Europe/Australia and China, and on a recent special issue of Energy Policy journal on emissions trading in China, edited by Loeschel and Jotzo.  

17:00

Low-carbon innovation in China: prospects, politics and practices

S. Geall (University of Sussex, Brighton, United Kingdom), A. Ely (STEPS Centre, Sussex, United Kingdom)

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Low-carbon innovation in China: prospects, politics and practices

S. Geall (1) ; A. Ely (2)
(1) University of Sussex, Science Policy Research Unit, Brighton, United Kingdom; (2) STEPS Centre, SPRU - Science Policy Research Unit, Sussex, United Kingdom

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This paper explores innovation in China and its potential to contribute to global transitions to low-carbon patterns of development.  Building on earlier studies bringing alternative forms of low(er)-technology, ‘below-the-radar’, ‘disruptive’ and social aspects into innovation, and drawing on empirical research on electric mobility, solar-generated energy and food systems in China, the paper also pays particular attention to issues of changing power relations and social practices. Taken together, this shift in perspective allows neglected questions in low-carbon innovation to be introduced and points to both opportunities and challenges to low-carbon system transition that are overlooked by an orthodox focus on technological innovations alone.  

17:15

Intersections of China's Energy Technology Innovation, S&T Policies and Ongoing Reform

J. Fan (International Energy Agency, Paris, France)

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Intersections of China's Energy Technology Innovation, S&T Policies and Ongoing Reform

J. Fan (1)
(1) International Energy Agency, Paris, France

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China’s energy technology innovation, with a strong focus on clean energy technologies, is central to a strategy that faces head-on the dual challenge of satisfying energy demands while safeguarding the environment as part of China’s self-proclaimed “Energy Revolution”. Combining with the global concern on addressing climate change, China’s policies and actions in energy field have been focused on industrial transformation, energy system optimisation, energy efficiency promotion and the environmental protection. Recent energy technology innovation, S&T policies and reforms seek to capture opportunities for economic advantage from the transition to a cleaner, more sustainable and increasingly market-oriented system.

China has demonstrated some progress in its low-carbon and energy sector development. The remarkable progress could be tracked in the development of its Strategic Emerging Industries (SEIs), encouraged by the convergence of energy and S&T policies.

State R&D fund acts as one of the most important financing channels for energy technology innovation. China’s funding for research and technology (R&D) as a proportion of GDP (R&D intensity) is increasing, but unprecedented co-ordination among government and institutional actors will be needed to sustain innovation over the long term. Existing gaps create opportunities for institutional reform to promote innovation. A new round of S&T reform is being proceeded in China in aims of offering greater information disclosure and transparency and promoting the efficiency of resource allocation.

The commercialization of technology is another key issue requiring efforts to enhance China’s innovation competitiveness. Enforcing IP governance and encouraging the development of public-private partnerships (PPPs) to support innovative approaches to new market have been emphasized by the government.

Monitoring and evaluating innovation measures against energy sector and environmental benefits can help to improve policy implementation over time and lead to more effective innovation systems designed to meet the main public objectives. The effects of China’s ongoing reform in the field of energy and S&T are worth a further observation.

17:25

The transportation sector as a lever for reducing long-term Chinese mitigation costs

M. Hamdi-Cherif (CIRED, Nogent-Sur-Marne, France)

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The transportation sector as a lever for reducing long-term Chinese mitigation costs

M. Hamdi-Cherif (1)
(1) CIRED, Nogent-Sur-Marne, France

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** Rationale and Objective: Chinese economic development goes hand in hand with (i) a growth of the production that is accompanied with an increase of the freight transport, and (ii) an enriched population and fast-growing urbanization that induce increasing demand for passenger transport (notably an increase of the motorization rate). Given the high reliance of transport on oil products, its increasing energy demand and CO2 emissions, the transportation sector is a crucial sector for China, particularly regarding energy security and climate change issues. In its attempts to have a sustainable development, the transportation sector is indeed particularly challenging for China. To avoid important “lock-ins” in carbon-intensive pathways, especially given the high coal availability and the important life span of infrastructures, China has to redouble its efforts with voluntary schemes promoting mobility growth control.

This paper investigates the role of passenger and freight transportation activities in the transition to a low carbon Chinese society. A particular attention is given to specific measures designed to control the growth of mobility. It is an attempt to quantify the impact of urban voluntary policies on Chinese mitigation costs.

** Modeling approach and Methodology: This article revisits the role of the transportation sector in low-carbon pathways by using the Energy-Economy-Environment (E3) model IMACLIM-R. It is a hybrid multi-region, multi-sector CGE model, which embarks a detailed description of passenger and freight transportation. The standard representation of transport technologies is supplemented by an explicit representation of the “behavioral” determinants of mobility. The model relies on hybrid matrices ensuring consistency between money flows and physical quantities and allows an explicit representation of the interplay between transportation, energy and growth patterns. It accounts for the rebound effect of energy efficiency improvements on mobility, endogenous mode choices in relation with infrastructure availability, the impact of investments in infrastructure capacity on the amount of travel, and the constraints imposed on mobility needs by firms’ and households’ location.

Moreover, IMACLIM-R represents the second best nature of economic interactions and the inertias on technical systems that limit the flexibility of adjustments, a crucial dimension for emerging economies when envisaging large structural change over the course of the century.

Complementarily to carbon pricing to reach a stringent climate objective (3.4W/m2 in 2100), we consider actions to control the “behavioral” determinants of transportation in the course of the low-carbon transition, and assess their effects on the Chinese economy. More specifically, we consider (i) urban reorganization lowering the constrained mobility (i.e. mobility for commuting and shopping), (ii) reallocation of investments in favor of public modes at constant total amount for transportation infrastructure and (iii) adjustments of the logistics organization to decrease the transport intensity of production/distribution processes.

** Results: This analysis demonstrates the risk of high losses if using carbon price as the sole instrument of mitigation. Transport proves to be the sector for which carbon emissions are the more difficult to reduce. It thus represents a dominant share of remaining emissions in the long-term when ambitious mitigation objectives are set. Because of its weak reactivity to price increases, very high levels of carbon prices are needed in the second half of the century to reach low mitigation targets. We find indeed that they can reach 1400$/tCO2 by the end of the century.

But we find that controlling mobility growth allows limiting these effects by offering mitigation potentials independent of carbon prices. The considered measures allow significant reductions of carbon price levels (on average 25% lower over 2050-2100) and hence help limiting the macroeconomic costs of the mitigation policies (e.g. long-term mitigation costs are reduced by 5 points in 2050 and by 10 points in 2100).

** Conclusion: This study highlights the role of transport in the mitigation process. Given a climate target, the implementation of measures fostering a modal shift towards low-carbon modes and a decoupling of mobility needs from economic activity prove to modify the sectoral distribution of mitigation efforts and to significantly reduce the mitigation macro-economic costs relatively to a “carbon price only” policy.

17:35

A political economic analysis over the climate policy implementation - A case from Chinese wind energy development

D. Yixin (Tsinghua University, Beijing, China)

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A political economic analysis over the climate policy implementation - A case from Chinese wind energy development
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17:45

Panel discussion

S. Geall (University of Sussex, Brighton, United Kingdom), F. Jotzo (Australian National University, Canberra, Australia), A. Ely (STEPS Centre, Sussex, United Kingdom), A. Loeschel (Department of Economics, Muenster, Germany), F. Teng (Tsinghua Universit

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Panel discussion
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