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�

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. �

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  

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�

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? �

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  

Baseline  Projec?on-­‐-­‐China�

Real  GDP  projec?ons� CO2  emissions  projec?ons �

CO2  emissions  intensity  projec?ons �

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 �

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!�

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.�

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. �

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. �

Thank you for your attention!�

Policy  simula?on  algorithm