Optimal CO2 abatement pathway with induced technological progress for chinese coal-fired power industry

This study attempts to analyze the integrated effects of carbon pricing in Chinese coal-fired power industry in two studied cases: with and without induced technological progress. Then several CO2 abatement pathways with different levels of carbon pricing are synthetically assessed for Chinese coal-fired power industry by extending a hybrid energy-economic model. Two types of autonomous technological progress such as industrial technology upgrading and autonomous energy efficiency improvement have been exogenously set for all economic sectors. One type of induced technological progress such as direct carbon removals is assumed to be introduced in coal-fired power industry, and its market share is endogenously calculated. Especially, oxy-fuel CCS technology is considered as a potential commercialized option for direct carbon removals. Then with different levels of carbon price setting for the newly increased CO2 emissions from coal-fired power industry, energy-economic indicators such as electricity cost, generation efficiency, economic growth, and CO2 emissions are comparatively analyzed for the choice of CO2 abatement pathway. Simulated results reveal that the upward trend of CO2 emissions cannot be changed within midterm if without induced technological progress. However, if with induced technological progress when carbon pricing is high enough, CO2 emissions could stop the upward trend, and even become decreasing accompanied by certain macroeconomic losses. When oxy-fuel CCS technology is introduced by charging for the newly increased CO2 emissions at 100 RMB2002 Yuan/t CO2, the induced CO2 abatement pathway of Chinese coal-fired power industry could be regard as optimal.