Carbon neutrality and socio-economic development

To achieve the 1.5°C goal, the world needs to reach carbon neutrality by the mid-century. The achievement of carbon neutrality not only relates to climate change mitigation, but also delivers unprecedented and tremendous changes to society in green economic growth, responsible consumer behaviours, human well-being, and health.

This special issue originated from the China-UK Workshop on Climate Change Economics held by Center for Energy and Environmental Policy Research, Beijing Institute of Technology and Bartlett School of Sustainable Construction, University College London. This special issue serves as a platform for the researchers to have a discussion on the balance between socioeconomic targets and actions for decarbonization strategies. The papers in this SI cover topics on decarbonization of economic growth, transition in energy system, firms’ commitment to carbon neutrality, and the trends of carbon neutrality-related research in recent decades.

China’s commitment to carbon neutrality is critical to the global efforts in climate change mitigation since it has been the world’s largest emitter since 2006. The achievement of carbon neutrality in China should be based on a thorough transition of the economic growth mode in the process of industrialisation and urbanisation. The old approaches of heavy investments in physical infrastructure, with a focus on manufacturing, high-carbon infrastructure and fossil fuel, need to be abandoned. By linking the 14^th Five-Year Plan and carbon neutrality goal, Stern and Xie (2023) proposed a new growth story for China to shift from overexploitation of natural resources and the chase for material wealth to a multidimensional conception of human well-being, protection of natural resources, boost of sustainable technologies, and changes in consumer behaviour. Investment in sustainable growth and low-carbon innovations is vital to promote the structural transformation of industries.

In achieving the carbon neutrality goal, energy transition is one of the most important approaches. By establishing an evaluation indicator system, Li et al. (2023) assessed the progress in the energy production revolution during 2015–2019 in China. Results indicate that the production revolution in the supply-side management of energy and clean development and the efficient utilization of coal are the most prominent aspects of revolution advancements. A slowdown of the energy production revolution in 2018 and 2019 is also shown. China’s energy system is facing some challenges, including insufficient technology innovation, weak consumption and storage capacity for clean energy, sluggish construction of the energy product standard system and transaction management system, the brittle cross-regional transmission of energy, and the backward construction of an energy production intelligent system. R&D investment in clean power generation technology, the establishment of intelligent energy production, supply, storage and marketing systems, and the improvement of the energy market transaction mechanism are proposed to promote energy production revolution in the future.

Firms are effective actors in carbon emissions reduction because they are the main emitters in economic activities. Therefore, firms’ commitment to carbon neutrality is vital to the achievement of global climate targets. It manifests the social responsibility of a firm from the lens of Environmental, Social, and Governance (ESG). Based on the data from 166 firms with the carbon neutrality commitment during 2017 to 2021, Xie et al. (2023) conducted a quantitative modelling study and built an ESG combined score to evaluate the impact of a carbon neutrality pledge on firm value. In short term, firms experience losses in market value from committing to be carbon neutral, which is because of extra costs to business operations and the conflicts between ESG and the organisational goal to maximise shareholders’ profits. Although a short-term loss in firms’ value can be observed, firms could be rewarded in ways such as tax preferences and easier access to bank loans, hence benefit in the long term.

To better understand the trends of carbon neutrality-related research and guide research in the future, Fan et al. (2023) conducted a bibliometric analysis based on 2,918 publications related to carbon neutrality. There is an explosive growth of studies in carbon neutrality in recent years due to the need for climate governance and the growing awareness of carbon neutrality, with two third of total studies published from 2015 to 2021. The results revealed a trend of the study topics shifting from ecological carbon sinks before 2007 to carbon markets, bioenergy, and bio-based products from 2008 to 2014, and then to carbon sequestration technologies, hydrogen, and fuel cells after 2015. The analysis of research streams revealed that future studies can focus on biochar, electrocatalysis, microalgae, energy transition, and biomass pyrolysis.

Carbon neutrality needs an urgent and thorough transformation in energy systems and industry structures. This SI discusses the new economic growth model of China, the revolution in energy production, the commitment to carbon neutrality of firms and research trends in this area. The studies in this SI provide insights regarding the pathway and impacts of carbon neutrality from both macro and micro aspects. Suggestions for future research topics are also provided in this SI.

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No potential conflict of interest was reported by the authors.

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Notes on contributors

Zhifu Mi

Zhifu Mi is Professor of Climate Change Economics at University College London (UCL). He has published papers in leading journals, such as Lancet, Science Advances, Nature Energy, and Nature Sustainability. He was named in the Clarivate Highly Cited Researchers list and Forbes ’30 Under 30′ Europe list. His research was awarded the 2021 Best Paper Award in Energy Economics, 2017 Best Early Career Article in Environmental Research Letters, and 2016 Highly Cited Original Paper in Applied Energy.

Yuning Gao

Yuning Gao is an Associate Professor at School of Public Policy and Management, and Associate Researcher at Institute for Contemporary China Studies, Tsinghua University. He holds PhD in Land Economy from University of Cambridge, Master of Management and Bachelor of Engineering from Tsinghua University. He was elected the president of Chinese Economics Association Europe/UK, standing Board Member of the Committee of Social and Economic System Engineering of the Society of System Engineering of China.

Hua Liao

Hua Liao is Professor and Deputy Director of Center for Energy and Environmental Policy Research (CEEP) at Beijing Institute of Technology, China. He is Vice President of Chinese Society of Energy Economics and Management. He has been the principal investigator of over 10 energy economics and climate policy research projects granted by the National Natural Science Foundation of China (NSFC) and other ministries of China. He has served several journals as editorial member or guest editor.