Regional Analysis

The impact of coordinated policies on air pollution emissions from road transportation in China

A recent study estimates that about 1.6 million people in China die each year—roughly 4,000 a day—from heart, lung and stroke disorders due to poor air quality Most of the nation’s lethal air pollution, including headline-grabbing toxins such as fine particulate matter (PM2.5) and ground-level ozone (O3), is produced in its coal-dominated energy and industrial sectors. But a substantial and growing contributor to the problem is road transportation; as private vehicle ownership and freight traffic increase, so, too, do ambient concentrations of pollutants from gasoline and diesel fuel exhaust.

Concerned about ongoing health risks linked to high concentrations of air pollutants, China has recently taken measures that are expected to improve its air quality. These include an economy-wide climate policy that puts a price on carbon dioxide (CO2) and lowers emissions that degrade air quality, and tailpipe and fuel-economy standards that target vehicle emissions only. What remains to be seen is how effective these measures will be in reducing China’s air pollution problem.   

Addressing that question head-on, a new study in the journal Transportation Research Part D: Transport and Environment evaluates the overall impact on China’s air pollution levels of implementing both an economy-wide climate policy and vehicle emissions standards. Using an energy-economic model, a team of researchers from MIT, Tsinghua University and Emory University finds that by 2030, implementation of China’s current vehicle emissions standards—or more stringent versions thereof—will considerably reduce road transportation’s contribution to the nation’s total air pollution, and that an economy-wide price on CO2 will significantly lower air pollution from other sectors of the economy through incentivizing a transition to less carbon-intensive energy sources such as natural gas and renewables. The researchers conclude that a coordinated policy, combining well-enforced vehicle emissions standards and an economy-wide carbon price, would help enable China to meet both its air quality and climate-change mitigation goals. 

The Future of Coal in China

As the world’s largest consumer of total primary energy and energy from coal, and the largest emitter of carbon dioxide (CO2), China is now taking an active role in controlling CO2 emissions. Given current coal use in China, and the urgent need to cut emissions, ‘clean coal’ technologies are regarded as a promising solution for China to meet its carbon reduction targets while still obtaining a considerable share of energy from coal. Using an economy-wide model, this paper evaluates the impact of two existing advanced coal technologies—coal upgrading and ultra-supercritical (USC) coal power generation—on economic, energy and emissions outcomes when a carbon price is used to meet China’s CO2 intensity target out to 2035. Additional deployment of USC coal power generation lowers the carbon price required to meet the CO2 intensity target by more than 40% in the near term and by 25% in the longer term. It also increases total coal power generation and coal use. Increasing the share of coal that is upgraded leads to only a small decrease in the carbon price. As China’s CO2 intensity is set exogenously, additional deployment of the two technologies has a small impact on total CO2 emissions.

With a single executive order issued at the end of March, the Trump administration launched a robust effort to roll back Obama-era climate policies designed to reduce U.S. carbon dioxide (CO2) emissions. Chief among those policies is the Clean Power Plan, which targets coal and natural gas-fired electric power plants that account for about 40 percent of the nation’s CO2 emissions.

Clean power planning

Accounting for nearly one-third of the global land surface, forests help regulate the climate and protect watersheds while providing consumer products and outdoor experiences that enhance the quality of life. Climate change will inevitably influence forests’ ability to deliver these services, but past studies have provided a limited picture of what changes may come this century. Now researchers from the Corvallis Forestry Sciences Laboratory, MIT, Ohio State University and the U.S.

The future of forests under climate change
Hedging Strategies: Electricity Investment Decisions under Policy Uncertainty

Given uncertainty in long-term carbon reduction goals, how much non-carbon generation should be developed in the near-term? This research investigates the optimal balance between the risk of overinvesting in non-carbon sources that are ultimately not needed and the risk of underinvesting in non-carbon sources and subsequently needing to reduce carbon emissions dramatically. We employ a novel framework that incorporates a computable general equilibrium (CGE) model of the U.S. into a two-stage stochastic approximate dynamic program (ADP) focused on decisions in the electric power sector. We solve the model using an ADP algorithm that is computationally tractable while exploring the decisions and sampling the uncertain carbon limits from continuous distributions.

The results of the model demonstrate that an optimal hedge is in the direction of more non-carbon investment in the near-term, in the range of 20-30% of new generation. We also demonstrate that the optimal share of non-carbon generation is increasing in the variance of the uncertainty about the long-term carbon targets, and that with greater uncertainty in the future policy regime, a balanced portfolio of non-carbon, natural gas, and coal generation is desirable.

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