An Estimation of the Effect of Carbon Pricing for CO2 Mitigation in China’s Cement Industry

Event: The 17th Global Conference on Environmental Taxation (GCET17)
Date: September 22-23, 2016 (Groningen, Netherland)

This study estimates the effect of carbon pricing for CO2 mitigation in China’s cement industry considering a total of 16 low carbon technologies. The statistics and prediction indicate that cement production of China has been increased dramatically in the past, and would experience a plateau period in the next few years. Through the continuous elimination of outdated and small scale facilities, around 80% of the cement would be made by the kilns with a capacity of 4,000 to 8,000 t-clinker/d by 2030. The energy saving and carbon mitigation technologies covered in this estimation are at different deployment stages and usually require 10 to 20 years for a full diffusion. The remained technology mitigation potential is about 8.8% by 2025 and 10.2% by 2030. Nevertheless, giving carbon prices would have limited effect for promoting the mitigation of CO2 emissions of this sector. A reduction of 9.9 and 12.9 Mt-CO2 might be realized in 2015, respectively under a price of 60 and 100 Yuan/t-CO2, comparing to the level of non-pricing scenario. The reduction attributed to carbon pricing would become similar at around 4.9 Mt-CO2 in 2020 under both price levels. Additionally, around 70% of the mitigation may be at a marginal cost of 50 Yuan/t-CO2 by 2020. The marginal cost for nearly 90% of the policy mitigation would be below 100 Yuan/t-CO2 by 2030.
This study confirms that the administrative and regulative policies have been effective for the application of energy saving and carbon mitigation technologies in China’s cement industry. In spite of the limited effect, the pricing of carbon emissions is useful for promoting the diffusion of certain technologies in faster paces. The earlier the carbon price was imposed, more significant mitigations could be realized by this economic policy. This appeals the introduction of carbon pricing policy as early as possible in China, with a condition that the carbon price is modest and affordable for the business.