The Prospects and Economic Costs of the Reduction of CO₂ Emissions in the People’s Republic of China (PRC)

Abstract

The energy demand growth rate in developing countries exceeds that in developed countries and, as a result, the share of CO₂ emissions from the Third World will exceed that from the developed countries as forecasted by Manne and Richels (1990).¹ (See Figure 1.) More and more concern has been given to the potential of reducing CO₂ emissions in developing countries by energy conservation and the transition to noncarbon energy sources. However, the cost of these energy sources is often much higher. As a result, the constraints of financial sources will limit the exploitation of these alternatives and hence the increasing of CO₂ emissions will continue in the developing countries. Manne and Richels give the relative costs of various energy sources as shown in Table 1. The estimated annual losses in aggregated gross domestic product (GOP) due to a carbon emission limit has been found intolerable in the case of China, in which 70% of the primary energy comes from coal, as shown in Figure 2. Such a penalty is much higher than the tolerable limit of deVeloping economies. An analysis is therefore carried out to re-evaluate the potential of various energy conservation and noncarbon resources in China, and the possible strategy of deployment of these sources, as well as the trends of the costs involved.