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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]