An integrated CO₂ tax and subsidy policy for low carbon electricity in Guangdong, China

ABSTRACT

In order to tackle climate change, Guangdong has been chosen as an experimental province for low carbon transition by the Chinese government. To analyze the low carbon transition of the electricity sector in Guangdong, a techno-economic model is developed. By applying the model, the policies of CO₂ tax and subsidy are analyzed first. Based on the analysis, an optimal integrated CO₂ tax and subsidy policy is designed to exert positive pole and limit negative effects of a simple CO₂ tax or subsidy policy. As a result, the development of renewable power can be incentivized efficiently and the development of coal-fired power plants can be inhibited. The CO₂ emission per unit electricity supply can be reduced about 25.1% by 2020 compared with that in 2007.The cost of unit electricity supply will increase about 15.1%, which is close to that in a no-policy scenario and similar to the historical level.

KEYWORDS:

• China
• CO₂ abatement
• electricity system
• energy model
• Guangdong
• tax and subsidy

Additional information

Funding

This work was co-funded by National Natural Science Foundation of China under grant no. 42001084 and the Strategic Programme Fund project “Guangdong—China’s pilot province in exploring a shift to low carbon economy” which was supported by British Foreign & Commonwealth Office.