AIM/China: Progress in 2005 ERI AIM Project team Prepared for 11th - PowerPoint PPT Presentation

AIM/China: Progress in 2005 ERI AIM Project team Prepared for 11th AIM Workshop Feb.19-20, 2005, NIES, Tsukuba

Application of AIM/China in 2005-2006 •Energy and GHG Emission scenario up to 2030 •Urban Transport Development Study •Energy Fiscal Policy Assessment •Energy Five Year Plan for Hainan Province •Beijing Energy and Environment Analysis •Climate and Development: Clean Coal technology Assessment •Long-term Emission Scenarios up to 2050 •APEIS

Application of AIM/China in 2005-2006 • Energy and GHG Emission scenario up to 2030 •Urban Transport Development Study •Energy Fiscal Policy Assessment •Energy Five Year Plan for Hainan Province •Beijing Energy and Environment Analysis •Climate and Development: Clean Coal technology Assessment •Long-term Emission Scenarios up to 2050 •APEIS

Energy and GHG Emission scenario up to 2030 • Including most recent energy data(up to 2004 and 2005) • National plan(Economy growth, energy conservation plan, renewable energy plan) • Circulating Economy Modeling(Process linkage within AIM/Enduse model) • Results to be finished

Application of AIM/China in 2005-2006 •Energy and GHG Emission scenario up to 2030 • Urban Transport Development Study •Energy Fiscal Policy Assessment •Energy Five Year Plan for Hainan Province •Beijing Energy and Environment Analysis •Climate and Development: Clean Coal technology Assessment •Long-term Emission Scenarios up to 2050 •APEIS

Urban Transport Development Study •Ultra-Large City: Beijing, Shanghai, Chong Qing •Large rich city: Hangzhou •Large Poor city: Taiyuan(?), Yin chuan, Xining •Small city: Lang Fang

Application of AIM/China in 2005-2006 •Energy and GHG Emission scenario up to 2030 •Urban Transport Development Study • Energy Fiscal Policy Assessment •Energy Five Year Plan for Hainan Province •Beijing Energy and Environment Analysis •Climate and Development: Clean Coal technology Assessment •Long-term Emission Scenarios up to 2050 •APEIS

Framework of IPAC Environment industry Energy demand and supply Pollutant emission Price/investment Medium/long-term analys IPAC-SGM IPAC-AIM/MATERIAL Economic impact Medium/long-term analysis Energy demand and suppl Energy demand and supply Full range emission Price/investment IPAC-TIMER IPAC-Emission Price, resource, technolog Medium/long-term analysis Medium-long term analysis Economic impact Technology development IPAC/Tech Environment impact Technology policy Medium/short term analysis IPAC/AIM-Local IPAC-AIM/tech Technology assessment Region analysis Detailed technology Medium/short analysis flow Energy demand and supply AIM-air IPAC-health Technology policy ERI, China ERI, China

Establishment of fiscal and taxation policies for energy sustainable development in China Vehicle fuel tax 1.Vehicle fuel 5 tax (change fee 4.5 to tax and 4 vehicle fuel tax) 3.5 2006 Yuan/L 3 2010 2.5 2020 2 2030 1.5 1 0.5 0 Gasoline Diesel GTL Alcoholic fuelBio-diesel 2006 2010 2020 2030 2.4 3.6 4.6 汽油 Gasoline 1.1( 费 改税 , change fee to tax) 柴油 Diesel 1( 费 改税 , change fee to tax) 2.1 2.7 3.4 GTL 2.1 2.7 3.4 醇 类 燃料 Alcohol fuel 1 1 1 1 1 1 1 生物柴油 Bio-diesel

Establishment of fiscal and taxation policies for energy sustainable development in China (Cont.) 2. Energy tax (based on heat value and 3. Carbon tax encourage clean energy) 2006 2010 2020 2030 Carbon Tax 煤炭 Coal 0 50 80 120 石油 Oil 0 50 70 100 天然气 Natural Gas 250 0 50 60 80 元／吨碳, Yuan/tC 能源税，IPAC 200 Energy tax 元／吨标煤, Yuan/tce 140 150 120 2006 100 100 80 2010 60 2020 50 40 2030 20 0 0 其他可再生能源 Other renewable 炭 油 气 电 2005 2010 2020 2030 o 煤 石 然 水 l r a l d 天 o i y C O H G N energy

Establishment of fiscal and taxation policies for energy sustainable development in China (Cont.) 4. End-use energy price 2005 2010 2020 2030 石油制品 Oil product 2822 3116 3912 4430 Yuan/Ton Yuan/m 3 天然气 Natural Gas 1.61 1.6 1.67 1.76 煤炭 Coal 495 496 500 489 Yuan/Ton 电力 Electricity 0.45 0.46 0.47 0.47 Yuan/KWh 醇类染料 Alcoholic Fuel 2900 2900 2900 2900 Yuan/Ton 生物柴油 Bio-diesel 5300 4300 3900 3800 Yuan/Ton 5 . Utilization of tax revenue In modeling: 70% goes to government revenue, as common expense for government 30% goes to expense for energy conservation and new energy development

Indicators for policy assessment • Cost and benefit • Energy security • Rural energy supply • Poverty • Production safety • Emission mitigation • Water and land damage • Institutional arrangement • Economy promotion • Employment • Multiple development objectives

Establishment of fiscal and taxation policies for energy sustainable development in China (Cont.) 6. Tax neutrality: Individual income tax: reduced by 5% Corporation income tax: reduced by 3% 7. Price elasticity: Mainly used for the analysis for vehicle fuel tax with consideration of impact of price increase on people’s traveling. Because of deficit of detailed research on it, the result of other countries’s study is adopted, with a value of –0.25

Modeling analysis result: Baseline scenario 中国一次能源需求 中国终端能源需求 Primary energy demand in China Final Energy Demand in China 3000 5000 Wind 2500 4000 Heat Biomass 2000 Mtce 3000 Electricity Mtce Nuclear 1500 N.gas 2000 Hydro Oil Prod. 1000 1000 Coal N.gas 500 0 Crude Oil 0 2000 2010 2020 2030 Coal 2000 2010 2020 2030 Year Year 中国终端分部门能源需求 CO2排放量 Final energy demand by sector in China CO2 Emission 25 3000 亿吨碳, 10 8 tC 2500 20 Rural 2000 Mtce 15 Urban 1500 Transport 1000 10 Service 500 5 Industry 0 Agriculture 2000 2010 2020 2030 0 2000 2010 2020 2030 Year 年份, Year

Modeling analysis result: Baseline scenario (Cont.) CH4 排放量 N2O 排放量 CH4 Emission N2O Emission 60 1 百万吨 CH4, MTon 1 百万吨 N, MTon 50 1 40 1 30 0 0 20 0 10 0 0 0 2000 2010 2020 2030 2000 2010 2020 2030 年份, Year 年份 TSP排放量 SO2 排放量 SO2 Emission TSP Emission 400 30 350 百万吨, MTon 百万吨, MTon 25 300 250 20 200 15 150 10 100 50 5 0 0 2000 2010 2020 2030 2000 2010 2020 2030 年份, Year 年份, Year

Modeling analysis result: Energy tax scenario 能源税对中国GDP的影响 Effect of energy tax on GDP of China 0.5% 损失率 %, Loss Rate 0.4% 0.3% 0.2% 0.1% 0.0% 2000 2005 2010 2015 2020 2025 2030 年份, Year 能源税对能源需求的影响 Effect of energy tax on energy demand 节能率%, Reduction Rate 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2000 2005 2010 2015 2020 2025 2030 年份，Year

Modeling analysis result: Carbon tax scenario 碳税对GDP的影响 Effect of carbon tax on GDP 0.5% 损失率%, Loss Rate 0.4% 0.3% 0.2% 0.1% 0.0% 2000 2005 2010 2015 2020 2025 2030 年份, Year 碳税对能源需求的影响 Effect of carbon tax on energy demand 25% 节能率 %, Reduction rate 20% 15% 10% 5% 0% 2000 2005 2010 2015 2020 2025 2030 年份, Year

Modeling analysis result: Fuel tax scenario 碳税对CO2排放的影响 Effect of carbon tax on CO2 emission 减排率 %, Reduction rate 30% 25% 20% 15% 10% 5% 0% 2000 2005 2010 2015 2020 2025 2030 年份, Year 采用机动车燃料税的能源效果 Energy effect of fuel tax 700 百万吨标煤, Mtce 间接效果 600 Indirect 500 effect 400 直接效果 Direct 300 effect 200 基准情景 100 Baseline scenario 0 2000 2010 2020 2030 年份, Year

Primary conclusion � According to the primary analysis result, the energy tax has an apparent effect on controlling energy demand. Compared with baseline scenario, in energy tax scenario, energy demand in 2020 will decrease by 12.7%, saving about 400 million tce energy and having an apparent environmental effect � Due to the energy price increase that restrains the economy development and the decrease of energy industry production, the effect on GDP is negative. The loss rate of GDP is 0.38% (62.2 billion Yuan) and GDP increase rate has a little drop, from 5.6% to 5.579%.

Primary conclusion (Cont.) � If considering the social cost induced by the fast development of energy system, mainly including energy security cost, cost resulting from the enlargement of international market, environmental cost, etc, the adoption of energy tax will have more apparent impact. Specifically, the recent discussion about adoption of fuel tax give a good opportunity to introduce energy tax. Compared with the current plan of changing fee to tax, adoption of energy tax is much easier. � Adoption of fuel tax will not only have a directive effect on energy demand through the change of public selection of vehicle, but also in-directive effect through the increase of traveling cost due to fuel tax and corresponding decrease of traveling demand

Further work • Completion and improvement of model: taxation mode, effect of import and export, effect of tax on consumption behavior, further analysis of IPAC-SGM model • Use of tax renevue • Price elasticity • Parameters / scenario development