Exploring optimal mitigation and adaptation investment strategies in China

After the successful conclusion of the Paris Climate Conference (Conference of the Parties (COP) 21), countries are now attempting to identify implementation measures. An important consensus has been reached on the necessity of putting in place both mitigation and adaptation measures. In this context, this article builds a three-sector China and rest of the world model based on the DE-carbonization Model with Endogenous Technologies for Emission Reductions (DEMETER) and World Induced Technical Change Hybrid (WITCH) models. It assesses China’s mitigation and adaptation investment strategies by 2050 with an optimization including climate externalities. By making the 450 ppm target and China’s 2030 CO₂ emissions peak exogenous, it assesses two scenarios: (1) investment only in mitigation and (2) investment in both mitigation and adaptation. The article finds the following: First, the policy package with investment in both mitigation and adaptation can ensure lower CO₂ emissions and avoid more climate damage. Second, investment in adaptation should be massively injected by around 2040, whereas mitigation efforts should be continuous. Third, the CO₂ emissions peak in the tertiary sector should come prior to 2030 while the emissions pathway of the secondary sector could be allowed to increase slowly until 2035. POLICY RELEVANCE The necessity of engaging in both mitigation and adaptation has been widely accepted since the Paris Climate Conference (COP21), yet few studies exist in this regard concerning China. Substantial investment in adaptation needs to be introduced by 2040 while the investment on mitigation should peak by 2030. The CO₂ emissions peak in the tertiary sector would be reached prior to 2030 while the peak in the secondary sector is achieved around 2035. This provides an alternative in China to the existing argument of an earlier peak in the secondary sector.