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Abstract Recently, China's National Development and Reform Commission (NDRC) announced the establishment of a nationwide carbon emissions trading system (ETS), which will be the largest ETS in the world. The national ETS directly encourages enterprises to make a low-carbon transition through market mechanisms. In addition, the ETS is a potential source of significant government revenue through the auction of emissions permits. The allocation of this revenue is an important consideration for the NDRC. Some ETS areas already have experience with revenue recycling. For example, the California government directly returns ETS revenue to residents through electricity bill credits, as well as dedicated some of the revenue to the Greenhouse Gas Reduction Fund (GGRF). This study uses a computable general equilibrium (CGE) model to explore the economic impact of directly returning the revenue from the ETS to residents in China. At the same time, taking into account the significant differences between different income groups in urban and rural areas in China, the research explores the difference between different distribution policies. The results show that the coal industry will suffer the greatest negative impact from the ETS. By 2050, the number of people employed in the coal industry will fall by 63.8% compared to 2012, and under the ETS scenario, coal employment will decrease by 75.3%. However, these employment effects can be mitigated by targeted transfers to the displaced coal workers using ETS revenue. At the national level, ETS policies have a positive effect on GDP due to the income effect of revenue recycling. From the perspective of household income, the ETS policies will have differing impacts on different income groups. In addition, different income distribution methods will also change the impact on the income of different groups. Among these revenue distribution options, the distribution by population be most conducive to the promotion of social equity. [ABSTRACT FROM AUTHOR]

Highlights • The impact of the ETS on social equity is assessed. • A dynamic CGE model with disaggregated labor and household sectors is developed. • Employment in China's coal industry will decline by 75% in 2030 in the ETS scenario. • ETS revenue will peak at 2278 billion yuan in 2042 in our scenario. • ETS revenue redistribution can reduce the Gini coefficient by 10% compared to BAU. Abstract Carbon dioxide emissions trading systems (ETS) are an important market-based mitigation strategy and have been applied in many regions. This study evaluates the potential for a national ETS in China. Using a dynamic computable general equilibrium (CGE) model with detailed representations of economic activity, emissions, and income distribution, we examine alternative mitigation policies from now until 2050. Based on statistical and survey data, we disaggregate the labor and household sectors and simulate the impacts of ETS policies on the incomes of different household groups. We find that ETS has the potential to reconcile China's goals for sustained, inclusive, and low-carbon economic growth. Results show some key findings. First, the number of unemployed people in energy-intensive industries such as coal and construction will continue to increase; by 2050, employment in the coal industry will decline by 75%. Second, if the scope of the carbon market extends to all industries in China, carbon market revenues will continue to increase, reaching a maximum of 2278 billion yuan ($336 billion) in 2042 to become the world's largest carbon market. Third, the distribution of benefits from the national ETS can help achieve greater social equity. By comparing different distribution policies, we find that the combination of targeted subsidies for unemployed coal workers and direct household subsidies based on proportional per capita will reduce the social income gap to the greatest extent compared with other scenarios. By 2050, this distribution policy will reduce the Gini coefficient in China by 10% compared to the Business as Usual (BAU) scenario. [ABSTRACT FROM AUTHOR]

California aims to reduce greenhouse gas (GHG) emissions to 40% below 1990 levels by 2030. We compare six energy models that have played various roles in informing the state policymakers in setting climate policy goals and targets. These models adopt a range of modeling structures, including stock-turnover back-casting models, a least-cost optimization model, macroeconomic/macro-econometric models, and an electricity dispatch model. Results from these models provide useful insights in terms of the transformations in the energy system required, including efficiency improvements in cars, trucks, and buildings, electrification of end-uses, low- or zero-carbon electricity and fuels, aggressive adoptions of zero-emission vehicles (ZEVs), demand reduction, and large reductions of non-energy GHG emissions. Some of these studies also suggest that the direct economic costs can be fairly modest or even generate net savings, while the indirect macroeconomic benefits are large, as shifts in employment and capital investments could have higher economic returns than conventional energy expenditures. These models, however, often assume perfect markets, perfect competition, and zero transaction costs. They also do not provide specific policy guidance on how these transformative changes can be achieved. Greater emphasis on modeling uncertainty, consumer behaviors, heterogeneity of impacts, and spatial modeling would further enhance policymakers' ability to design more effective and targeted policies. This paper presents an example of how policymakers, energy system modelers and stakeholders interact and work together to develop and evaluate long-term state climate policy targets. Even though this paper focuses on California, the process of dialogue and interactions, modeling results, and lessons learned can be generally adopted across different regions and scales. [ABSTRACT FROM AUTHOR]

To achieve nationally determined contribution (NDC) targets, China has developed a series of low carbon development plans. Among them, the clean energy transformation is very crucial. This study evaluates the impact of a set of policies including the development of renewable energy, upgrading heavy industry, and energy efficiency improvement on China's income gap between 2012 and 2050. A dynamic computable general equilibrium (CGE) model with detailed representations of economic activity, an upgraded labor market and disaggregated labor types based on statistical and survey data is used. Our research provides support for the necessity of low-carbon policies to achieve NDC targets. Results show some key findings. First, low-carbon policies have the greatest impact on employment across all energy industries, with negative impacts in most traditional energy sectors and positive impacts in most renewable power sectors. Second, labor will continue to migrate from rural to urban areas with the transformation of the economic structure and the urbanization rate will further increase, reaching a maximum of around 70%. The reduction of the rural population will bring new opportunities for the modernization of agriculture, increasing the income of rural residents and realizing the equitable development between urban and rural areas. Third, the income gap among urban residents will widen due to the different level of labor demand for employees with different education levels. • The impact of low carbon policies on employment and income is assessed. • A dynamic CGE model with disaggregated labor types is developed. • Policies have the positive employment impact in the renewable energy industries. • The income gap will decline between urban and rural residents. • The income gap will widen among urban residents. [ABSTRACT FROM AUTHOR]

Highlights • We analyze interaction between China's national ETS and economic transition. • Economic transition alone will reduce emissions by 16% below baseline by 2050. • Economic transition lowers the cost of mitigation for firms under an ETS. • Increased consumption in less emissions-intensive sectors boosts economic growth. Abstract China's leaders are increasingly committed to low-carbon economic development. Although China's economy has dramatically transformed since the initiation of economic reforms in 1978, it is still structurally different from post-industrial, high-income countries, and economic reform is ongoing. At the same time, China is taking major steps towards regulating its carbon dioxide emissions. China is currently preparing to implement a national carbon dioxide emissions trading system (ETS), which will be the largest ETS in the world. Our analysis demonstrates how these major economic and emissions policies are linked in China's economy. We use a dynamic computable general equilibrium (CGE) model of China's economy to simulate the interaction between a structural transition policy and a national ETS. We demonstrate an important policy instrument – the household savings rate – for stimulating economic transition. We show that by increasing consumption in lower emissions-intensity sectors, China can sustain growth in its economy while reducing emissions and transitioning to a more OECD-like economic structure. In addition, emissions reductions from an ETS regulation can be achieved at a lower cost for regulated firms when taking into account the changing structure of the economy. [ABSTRACT FROM AUTHOR]

Employment impacts are one of the most important social impacts associated with the development of renewable energy, and are also one of the key concerns for policy makers designing renewable energy policies. Current studies tend to focus on the direct job changes in renewable sectors per se and on the indirect job changes along value chains of renewable energy, therefore depicting a picture of prosperity with large amounts of “green jobs”. However, the induced job changes in other sectors that are not directly in the value chains but are still influenced by electricity price changes and related financial resource transfers have usually been neglected, resulting in an incomplete and potentially biased understanding of this specific category of social impact. By using a computable general equilibrium (CGE) model of China that incorporates detailed renewable power generation technologies and considers labor market imperfections, our study tries to fill this gap and quantifies the full scope of job changes (direct, indirect and induced) brought by renewable energy development in China. Results show that per 1 TW h expansion of solar PV and wind power would create up to 45.1 thousand and 15.8 thousand, respectively, direct and indirect jobs in China. However, the scale of induced job changes is quite significant and may even lead to net job losses in the whole economy in some cases. We have further revealed the sectoral contributors to total job changes. In all, there are no assured conclusions on the occurrence of green jobs when developing renewable energy. The impacts are highly dependent on the species of renewable energy, the financing mechanisms for renewable subsidies, and the scopes of employment impacts. We suggest that full-scope employment impacts should be carefully considered and the detailed supporting policies should be carefully designed by decision makers when promoting renewable energy. [ABSTRACT FROM AUTHOR]