CHINAGEM-E: An Energy and Emissions Extension of CHINAGEM—And Its Application in the Context of Carbon Neutrality in China

This chapter introduces CHINAGEM-E, an energy and emissions extension of CHINAGEM. CHINAGEM-E has five major advancements from CHINAGEM, namely: (1) a finely disaggregated energy sector, (2) an advanced multi-layer fuel-factor nesting production structure, (3) a representation for specific carbon price, (4) physical quantitative accounts for energy consumption, electricity generation and CO2 emissions, and (5) CCS mechanisms. We illustrate the use of CHINAGEM-E in analyzing the energy and economic implications of carbon neutrality in China. We design a base-case scenario (BCS) to serve as the benchmark to which results are compared. We design a main policy scenario, the carbon neutrality scenario (CNS), to investigate the energy and economic implications for China to reach carbon neutrality. We discuss in detail the assumptions used in these scenarios, including the macroeconomic closure, the energy efficiency and preference shocks and the carbon emissions pathways. Key results (GDP, employment, energy profile, CCS removals) in BCS and CNS are presented and analyzed.