Economic instruments for mitigating carbon emissions: scaling up carbon finance in China’s buildings sector

Abstract

The relevance and cost-effectiveness are key criteria for policymakers to select appropriate policy and economic instruments for reducing carbon emissions.Here we assess the applicability of carbon finance instruments for the improvement in building energy efficiency by adopting the high efficiency standards as well as advanced energy supply systems, building on a case study in a northern city in China. We find that upgrading the current Chinese BEE standard to one of the best practices in the world coupled with the state-of-the-art energy supply system implies an abatement cost at 16US$/tCO 2 , which is compatible with the international carbon market price. The institutional reorganization turns out to be indispensable to facilitate the implementation of the proposed scheme of local government-led energy efficiency programme in the form of programmatic CDM in China's buildings sector. We show that with international support such as carbon finance, the BEE improvement will facilitate city's transition to low-carbon supply in the longer term. More importantly, it is argued that demand-side energy performance improvement in buildings should be considered a prerequisite to shifting low-carbon energy supply technologies such as fuel-switching, renewable power generation and Carbon Capture and Storage to address climate mitigation in light of cost-effectiveness and environmental integrity.

A comprehensive analysis of building energy efficiency policies in China: status quo and development perspective

“…Zhang et al's (2010) review analysis compared different energy use in China's building sector with its international counterparts. Li and Colombier (2011) assessed the cost-effectiveness of policy instruments in mitigating greenhouse gases emissions in China's building sector and examined the relevance of carbon finance. Kong et al (2012) reviewed the BEE policies in the 11th FYP period.…”

Can carbon finance promote high quality economic development: evidence from China

“…Wentao Gu, Jiaye Wang, Xiyuan Hua, and Zhongdi Liu (2021) [ 14 ] note that high-quality development is now a must for sustainable development. Using the spatial lag model [ 6 ], [ 15 ] analyze the interaction between environmental regulation, foreign direct investment, and high-quality economic development, and conclude that environmental regulation is advantageous for promoting high-quality economic development.…”

The Impact of Government Behaviors on the Transition Towards Carbon Neutrality in the Construction Industry: A Perspective of the Whole Life Cycle of Buildings

“…Law and executive orders are compulsory, whereas rewards and allowances are encouraging and voluntary for stakeholders in the construction sector (Saka et al, 2021). Li and Colombier (2011) have divided the governmental tools to regulate energy consumption into two categories, incentivesbased instruments and regulatory measures. The former is considered the most cost-effective, while the latter can also contribute to mitigating carbon emissions.…”

“…Government behaviors include law, executive order, reward and compensation (Saka et al, 2021). For industries, the adverse effects of their carbon emissions can be seen as externalities of their economic activities, and there are various ways to internalize the externality of economic activities (Li and Colombier, 2011). In response to this problem in the construction industry, governments typically face a two-step strategy: first, setting environmental targets (e.g., carbon emission mitigation); second, selecting policy tools based on various targets (Stavins, 1996).…”