Environmental and Resource Economics

, Volume 59, Issue 3, pp 455–477 | Cite as

Macroeconomic Impacts of Carbon Capture and Storage in China

  • Haakon Vennemo
  • Jianwu He
  • Shantong Li


Carbon capture and storage (CCS) is a key technology for reducing greenhouse gas emissions. But a CCS facility consumes vast amounts of energy and capital. With this in mind we analyze macroeconomic consequences of a large scale introduction of CCS in China. We modify and extend the DRC-CGE, a macroeconomic CGE model of the country that is used for long-term planning and policy analyses. We analyze an internal finance scenario of domestic funding, and an external finance scenario of international funding. In the external finance scenario CCS is installed on 70 % of all power plants by 2050. This increases demand for coal in 2050 by one fifth and import of coal by one fourth. The strain on coal resources may be an important political concern for China. In the internal finance scenario coal resources are not strained since this scenario introduces a price on carbon that lifts prices of energy. Moreover, the price on carbon cuts across the board and the internal finance scenario is much more effective at reducing \(\hbox {CO}_{2}\). On the other hand, in this scenario GDP goes down about 4 %, which also raises political concern.


GGE CCS Climate China 


  1. Aunan K, Berntsen T, O’Connor D, Persson TH, Vennemo H, Zhai F (2007) Benefits and costs to China of a climate policy. Environ Dev Econ 12(3):471–497CrossRefGoogle Scholar
  2. Calvin K, Clarke L, Krey V, Blanford G, Jiang K, Kainuma M, Kriegler E, Luderer G, Shukla PR (2012) The role of Asia in mitigating climate change: results from the Asia modeling exercise. Energy Econ 34:S251–S260CrossRefGoogle Scholar
  3. Chen W (2011) The potential role of CCS to mitigate carbon emissions in future China. Energy Procedia 4:6007–6014CrossRefGoogle Scholar
  4. China Daily (2013) China to further promote CCS efforts. Updated 2013-05-15. Scholar
  5. Clarke L, Krey V, Weyant J, Chaturvedi V (2012) Regional energy system variation in global models: results from the Asian modeling exercise scenarios. Energy Econ 34:S293–S305CrossRefGoogle Scholar
  6. Copeland BR, Taylor MS (2004) Trade, growth and the environment. J Econ Lit 42:7–72CrossRefGoogle Scholar
  7. EIA (2010) Annual energy outlook. US Energy Information Administration.
  8. Golan A, Judge G, Robinson S (1994) Recovering information from incomplete or partial multisectoral economic data. Rev Econ Stat 76:541–549CrossRefGoogle Scholar
  9. Golombek R, Greaker M, Kittelsen SAC, Røgeberg O, Aune FR (2011) Carbon capture and storage technologies in the European power market. Energy J 32(3):209–238CrossRefGoogle Scholar
  10. Hart C, Liu H (2010) Advancing carbon capture and sequestration in China: a global learning laboratory. China environment series, vol 11. Woodrow Wilson Center.
  11. Hertel T, Zhai F (2006) Labor market distortions, rural-urban inequality and the opening of China’s economy. Econ Model 23(1):76–109CrossRefGoogle Scholar
  12. IEA (2008) \(\text{ CO }_{2}\) capture and storage: a key abatement option. International Energy Authority, ParisGoogle Scholar
  13. IEA (2009) Technology roadmap carbon capture and storage. International Energy Authority, ParisGoogle Scholar
  14. IEA (2010) Projected costs of generating electricity, 2010th edn. International Energy Authority, ParisGoogle Scholar
  15. IPCC (2006) Carbon dioxide capture and storage.
  16. Li S (2011) China in 2030. Jingji Kexue Press, Beijing (in Chinese)Google Scholar
  17. Li XC, Wei N, Fang ZM, Li Q, Dahowski RT, Davidson CL (2011) Early opportunities for carbon capture and storage in China. Energy Procedia 4:6029–6036CrossRefGoogle Scholar
  18. Liu Q, Shi M, Jiang K (2009) New power generation technology options under the greenhouse gases mitigation scenario in China. Energy Policy 37:2440–2449CrossRefGoogle Scholar
  19. Mi R, Ahammad H, Hitchins N, Heyhoe E (2012) Development and deployment of clean energy technologies in Asia: a multi-scenario analysis using GTEM. Energy Econ 34:S399–S409CrossRefGoogle Scholar
  20. MIT (2007) The future of coal.
  21. NBS (2011) China energy statistical yearbook. China Statistics Press, BeijingGoogle Scholar
  22. New Energy Web (2010) It’s time for adjusting on-grid price of renewable energy (in Chinese). Accessed 17 May 2010
  23. Nicholson M, Biegler T, Brook BW (2011) How carbon pricing changes the relative competitiveness of low-carbon baseload generating technologies. Energy 36:305–313CrossRefGoogle Scholar
  24. NREL (2004) Biomass power and conventional fossil systems with and without \(\text{ CO }_{2}\) sequestration.
  25. Ringius L, Torvanger A, Underdal A (2002) Burden sharing and fairness principles in international climate policy. Int Environ Agreem Politics Law Econ 2:1–22CrossRefGoogle Scholar
  26. Robinson S, El-Said M (2000) GAMS code for estimating a social accounting matrix (SAM) using cross entropy (CE) methods. IFPRI working paper, International Food Policy Research Institute, Washington, DC 20006, USA, December 2000Google Scholar
  27. Robinson, S, Cattaneo A, El-Said M (2000) Updating and estimating a social accounting matrix using cross entropy methods. IFPRI working paper, International Food Policy Research Institute, Washington, DC 20006, USA, August 2000Google Scholar
  28. Succar S, Greenblatt JB, Williams RH (2006) Comparing coal IGCC with CCS and wind-CAES baseload power options.
  29. Theil H (1967) Economics and information theory. Rand McNally, Chicago, ILGoogle Scholar
  30. Vennemo H, Aunan K, He J, Hu T, Li S, Rypdal K (2008) Environmental implications of China’s WTO accession. Ecol Econ 64(4):893–911CrossRefGoogle Scholar
  31. Vennemo H, Aunan K, He J, Hu T, Li S (2009) Benefits and costs to China of three different climate treaties. Resour Energy Econ 31:139–160CrossRefGoogle Scholar
  32. Wang Y, Xu D, Wang Z, Zhai F (2004) Options and impact of China’s pension reform: a computable general equilibrium analysis. J Comp Econ 32(1):105–127CrossRefGoogle Scholar
  33. World Bank (2004) Clean development mechanism in China. Taking a proactive and sustainable approach. 2nd ednGoogle Scholar
  34. World Bank and DRC (2012) China 2030. Building a modern, harmonious and creative high-income society. Conference editionGoogle Scholar
  35. World Energy Council (2007) Survey of energy resources 2007. World Energy CouncilGoogle Scholar
  36. Zhai F, Li S (2002) The impact of WTO accession on income disparity in China. In: Renard M-F (ed) China and its regions: economic growth and reform in Chinese provinces, new horizons in international business. Edward Elgar, Cheltenham, pp 121–146Google Scholar
  37. Zheng L, Dongjie Z, Linwei M, West L, Weidou N (2011) The necessity of and policy suggestions for implementing a limited number of large scale, fully integrated CCS demonstrations in China. Energy Policy 39:5347–5355CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  1. 1.Oslo and Akershus University College of Applied SciencesOsloNorway
  2. 2.Development Research Center of State CouncilBeijingChina

Personalised recommendations