Equity-based carbon neutral plan induces cross-regional coal leakage and industrial relocation

Summary: China as a major coal-consuming economy faces the challenge of balancing economic development and carbon neutrality goal. This paper incorporates both efficiency-based and equity-based carbon neutrality policies into a numerical model to quantitatively assess how coal reduction under various carbon-neutral policies affects energy mix, economic growth, and industrial structures by 2060. Results show the nationwide coal intensity will ultimately plunge by over 95% from 2017 to 2060, mainly attributed to the coal-phasing-out in most industries. National Gross Domestic Product losses reaches 4,951 billion USD in efficiency-based scenarios by 2060, and the economic losses are even more severe in less developed provinces, especially provinces in Northern China. Although the equity-based policy can reduce the economic burden for the Northern China, the equity-based policy is accompanied by a significant regional shift in coal across the country: eastern coal-intense industries will be relocated northward, leading to increases in embodied coal consumption.