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Interregional Sharing of Energy Conservation Targets in China: Efficiency and Equity

Abstract:
Energy conservation is a long-term strategic policy in China to support its economic and social development. This strategy is important for saving resources, protecting the environment, and ensuring a secure supply of energy. However, energy conservation often involves large amounts of investment and may also have dampening impacts on some local and regional economies. Moreover, energy conservation has many features of a public good. Therefore, government policy will have to play a strong role to foster local efforts and interregional cooperation on this issue. This paper analyzes a promising policy instrument Ð an interregional energy conservation-quota trading system. An operational model is developed to simulate the workings of this policy instrument for a variety of quota allocations among regions. The results indicate that a tradable quota system can help China achieve its conservation target in a cost-effective way and in accordance with its regional development strategy.

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Energy Specializations: Energy Access – Sustainable Development and Distributed Energy; Energy Efficiency

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q48: Energy: Government Policy, Q21: Renewable Resources and Conservation: Demand and Supply; Prices, Q20: Renewable Resources and Conservation: General

Keywords: Energy conservation, permit trading, sustainable development, China

DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No4-3

Published in Volume 30, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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