Going Clean – The Economics of China’s Low-carbon Development

The report argues that China can achieve a deep carbon reduction by 2050 through sectoral transformations in electricity, industry, transport, and buildings, provided it receives international financial and technological support. It proposes a combination of domestic carbon taxes, a future cap-and-trade system, and a new 'Inter-country Joint Mitigation Plan' to facilitate technology transfer. The analysis emphasizes that a low-carbon transition is essential for China's modernization, offering opportunities to move up the value chain and improve energy security, though it will require active labour market policies to manage job losses in heavy industry.

• To keep global warming below 2°C, the global carbon budget for fossil fuels from 2000 to 2050 is estimated at 660 Gt CO2. If China's share is proportional to its current non-Annex 1 emissions, its budget would be 220 Gt CO2.
• A 'deep carbon reduction scenario' (DCRS) is technically feasible for China, with energy sector CO2 emissions peaking around 2017 at 7.4 Gt CO2 per year and falling to 1.9 Gt CO2 per year by 2050, resulting in cumulative emissions of 229 Gt CO2 between 2005 and 2050.
• The DCRS requires massive shifts in the transport sector, including a transition to electric vehicles where 90 per cent of all road passenger-km are delivered by electrical vehicles by 2050, and a complete transition to electric powered trains by 2030.
• Decarbonising electricity generation requires the accelerated retirement of all existing coal, oil, and gas-fired power plants by 2045, and the implementation of Carbon Capture and Storage (CCS) for all new coal plants built from 2020 onwards to capture 90 per cent of emitted CO2.
• A domestic carbon tax is identified as the most robust and practical instrument for China at its current development stage, as it aligns with existing resource tax reforms and is less politically sensitive than auctioning permits in a cap-and-trade system.
• The report proposes 'Inter-country Joint Mitigation Plans' (ICPs) as a replacement for the Clean Development Mechanism (CDM) to better align international technology transfer and finance with the host country's national sustainable development targets.
• Investment needs for China's mitigation efforts are estimated between USD 35 billion and 250 billion annually, with the power generation sector being the primary focus over the next decade.
• The transition to a low-carbon economy is framed as a modernization process that allows China to move up the value chain, expand its service sector, and improve energy security, though it necessitates active labour market policies to mitigate job losses in coal mining and heavy industry.
• Analysis of international trade suggests that China's success in world trade is based on cheap labour rather than cheap carbon, and that carbon tariffs on energy-intensive industries would have little effect on China's trade.

APA

Gang, F., Stern, L. N., Edenhofer, O., Shanda, X., Eklund, K., Ackerman, F., Li, L., & Hallding, K. (2009). Going Clean – The Economics of China’s Low-carbon Development. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/china-cluster/china-going-clean-20091221.pdf

Chicago

Gang, Fan, Lord Nicholas Stern, Ottmar Edenhofer, Xu Shanda, Klas Eklund, Frank Ackerman, Lailai Li, and Karl Hallding. Going Clean – The Economics of China’s Low-carbon Development. Stockholm Environment Institute, 2009. https://www.sei.org/mediamanager/documents/Publications/china-cluster/china-going-clean-20091221.pdf.

Wikipedia

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BibTeX

@techreport{gang2009going, author = {Gang, Fan and Stern, Lord Nicholas and Edenhofer, Ottmar and Shanda, Xu and Eklund, Klas and Ackerman, Frank and Li, Lailai and Hallding, Karl}, title = {{Going Clean – The Economics of China’s Low-carbon Development}}, institution = {Stockholm Environment Institute}, year = {2009}, month = nov, url = {https://www.sei.org/mediamanager/documents/Publications/china-cluster/china-going-clean-20091221.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }