CICERO - Senter for klimaforskning

Benefits and costs to China of three different climate treaties

Haakon Vennemo, Kristin Aunan, JW He, Tao Hu, Shantong Li

There are currently several ideas on the table for a climate treaty post-Kyoto. We consider the impact on China of three ideas: a cap on the CO2 intensity, a cap on the CO2 level, and a cap on the CO2 intensity in key sectors. We find that a cap on the CO2 intensity gives large environmental co-benefits to China on aggregate, but there are significant negative effects for rural households. Assuming these are addressed the country could reduce its CO2 intensity by a third before costs outweigh environmental co-benefits. By contrast a cap confined to the manufacturing and power sector does not bring substantial co-benefits to China.

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