Economic and environmental impacts of the coal-to-gas policy on households: Evidence from China
2022
Chen, Zhengjie | Tan, Yanyan | Xu, Juan
As the world's largest carbon emitter, China faces serious air pollution problems. Given that both carbon dioxide and air pollutants mainly come from burning of fossil fuels, the coal-to-gas policy has received widespread attention as a way to steer the public towards cleaner energy. However, inflexibility in the early implementation of the coal-to-gas policy caused a shortage of natural gas, and thus had negatively influenced households' lives. Considering the importance of clarifying the economic and environmental impacts of the coal-to-gas policy, this paper employs a dynamic recursive computable general equilibrium (CGE) model and sets different substitution scenarios, to simulate the impacts of the coal-to-gas policy on gross domestic product (GDP), sectoral output, trade, carbon emission reduction, and air quality improvement. The simulation results show that the long-term damage to GDP will be weaker than the short-term one, and carbon emissions would be reduced by 280 and 300 million tons in 2030 under the high and full substitution scenarios, respectively. The emissions of air pollutants (SO₂ and NOₓ) would also decrease significantly. Moreover, our results indicate that it is feasible to increase the substitution ratio in a stepwise manner and eventually achieve full substitution, which can not only effectively avoid shortages of natural gas, but also promote the coordinated control of carbon dioxide and air pollution emissions.
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