China’s energy production and consumption structures have long been dominated by coal and oil, which are the main air pollution and carbon-emission sources. Burning gas also produces carbon emissions, it however, compared to coal and oil, can produce far less SO2, NOx, CO, and dust. Therefore, gas is viewed as a type of clean energy from the perspective of environmental pollution as a whole. The proportions of coal and oil in the total energy production reached 77% and 9% in 2016, respectively, whereas the overall proportion of clean energy (i.e., gas and electricity) accounted for merely 14%. In that year, the shares of coal and oil in total energy consumption were as high as 62% and 19%, respectively, in contrast to the shares of gas and electricity which were 6% and 13%, respectively. In addition, more than 80% of energy commodities were consumed by production sectors. The fossil-fuel dominated energy structure has thereby led to severe carbon emissions and air pollution problems, because more than 95% of national CO2 emissions could be attributed to coal and oil combustion. After the Paris Agreement, China’s government promised to reduce its carbon emissions by raising the proportions of gas and electricity in the total energy consumption to 15% and 20% by 2030, respectively. Achieving this goal demands continuous massive efforts in accelerating clean transformation of China’s energy consumption in coming decades.  

To meet the goal of alleviating severe carbon emissions and environmental pollution and accelerating clean transformation of energy consumption, China has initiated a series of policies on clean energy substitution for polluting fossil-fuels (i.e., coal and oil) since the early 2010s. In 2013, the State Council issued the “Air Pollution Prevention and Control Action Plan” and implemented the “coal to gas” and “coal to electricity” projects to control air pollution in Beijing-Tianjin-Hebei, Yangtze River Delta, and Pearl River Delta city clusters. National Development and Reform Commission (NDRC) publicized the “Guiding Opinions on Promoting Electricity Substitution” in 2016 to substitute coal and oil of 130 million tons of coal equivalent (tce) with electricity in terminal energy consumption, which would enhance the electrification of production sectors. The “13th Five-Year Plan for Energy Development” released by NDRC in 2016 reemphasized the clean transformation of energy consumption, aiming to optimize the energy consumption structure via clean energy substitution for polluting fossil-fuels. Affected by clean energy substitution projects, Beijing, Shaanxi, and Zhejiang provinces achieved 2.56, 3.99, and 8.16 billion KWh of electricity substitution till 2017, respectively, equivalent to a reduction in coal and oil consumptions by 4.16, 1.28, and 3.3 million tce through a series of policy incentives, such as financial subsidies to power the grid and production equipment renovation and electricity price support.

Whereas most quantitative research concentrated on China’s energy structure from the perspective of production, an increasing number of studies have realized the importance of research problems on the consumption-side of the energy structure. Those studies include projections of China’s future energy demand utilizing econometric models, such as those by Yuan et al., Yuan et al., and Gao et al. A few others empirically analyzed the impacts of clean energy substitution based on both the econometric and computable general equilibrium (CGE) model. In the studies, the coal-to-gas substitution was firstly investigated to reveal the trend of replacing coal by gas in terminal energy consumption. Subsequently, dedicated attention has been paid to examining the electricity substitution for polluting fossil-fuels (i.e., coal-to-electricity and oil-to-electricity substitution), according to Lin et al., Wu et al., and Zhang et al.

Despite increasing efforts laid on projecting China’s future energy demand toward 2030, the existing studies have rarely focused on the central problem of the future energy consumption structure of production sectors. Some studies have attempted to project China’s total energy demand or the demand for a specific energy product, yet few have projected the structure of the future energy demand. Upon the same base year of 2016, studies agree that China’s proportion of coal in energy consumption would fall rapidly to 55.2–60.0% by 2020 and 45.4–50.19% by 2030, and the proportion of oil would decline by 5.9–10.3 percent points by 2020 and 21.6–25.8 percent points by 2030. Simultaneously, the proportions of gas and electricity would rise to 11.1–16.2% and 22.2–25.1% by 2030, respectively. Nevertheless, those studies on predicting sheerly the future national energy demand are not favored to offer a projection of the future energy consumption structure of production sectors.

Most studies have claimed to identify the positive economic and environmental effects of China’s energy production transformation using the CGE model. These studies, which normally focused on identifying energy consumption changes, have however exposed a disagreement in the economic and environmental impacts. Existing studies agree that clean transformation of energy production, especially for renewable energy development, would effectively reduce carbon emissions and produce green co-benefits in elevating economic growth and employment. Chen et al. and Niu et al. found that clean energy substitution in terminal energy consumption could effectively cut down carbon emissions. However, Lin et al. and Wu et al. demonstrated that the CO2 abatement by clean energy substitution is limited because fossil-fired electricity generation would also emit a large amount of CO2. Furthermore, previous studies suggested opposite analytical results for economic impacts of clean energy substitution. Some proved that clean energy substitution could increase the net values added from both energy and non-energy sectors, as well as total employment; others declared that clean energy substitution would cause damage to China’s energy production, trade, and economic activities. Much attention needs to be paid to assessing the impacts of future clean energy substitution on energy production, the economy, and the environment in China by merits of the CGE model.

The purpose of this study is to empirically examine the impacts of future clean energy substitution on energy production, the economy, and the environment. To achieve this goal, we first project the potentials of substituting polluting fossil-fuels with clean energy for different production sectors in China toward 2030 using the autoregressive integrated moving average (ARIMA) regression. Thereafter, a dynamic multi-sectoral CGE model, named CHINAGEM, is employed to study the impacts of future clean energy substitution on China’s energy production, the outputs of non-energy sectors, macro-economy, and CO2 emissions, based upon the projections. The study contributes to the current research realm in the following aspects: (1) a methodological approach is developed via coupling ARIMA with the CHINAGEM model, in which the ARIMA regression takes on forecasting changes in production sectors’ future energy consumption structure, and the CHINAGEM model is responsible for evaluating the impacts of clean energy substitution on the economy and environment. (2) The impacts of clean energy substitution are assessed from both the consumption and supply side of energy commodities. (3) The impacts on energy production, outputs of non-energy sectors, macro-economy, and CO2 emissions are empirically examined.

The remainder of this study is organized into three sections. Section 2 introduces the methodology and simulation model. Section 3 discusses the estimation results by the ARIMA regression and the simulation results by the CHINAGEM model for the impacts of clean energy substitution on the energy production, outputs of non-energy sectors, macro-economy, and CO2 emissions. The last section concludes the study with policy implications.

该文章以“Impacts of Clean Energy Substitution for Polluting Fossil-Fuels in Terminal Energy Consumption on the Economy and Environment in China”为题，发表在《sustainability》Sustainability 2019, 11(22), 6419