Energy consumption structural adjustment and carbon neutrality in the post-COVID-19 era

Abstract

Since the spread of COVID-19 pandemic all over the world, a significant recession has broken out with no precedent. China has brought up a new voluntary contribution target that achieving carbon neutrality by 2060. How to achieve climate change mitigation targets without heavily hindering economic development is of great importance in the future. In this study, a Markov chain model is employed to forecast primary energy consumption (PEC) structure and verify whether the carbon intensity target would be achieved under three scenarios with different economic growth rates, such as 6.1%, 4.2%, and 2.3%, respectively. A multi-sector dynamic stochastic general equilibrium (DSGE) model is employed to simulate and evaluate economic development, fossil and non-fossil energy consumption, and CO ₂ emissions under three scenarios using data calibration according to the Markov chain prediction result. The prediction results from the Markov chain show that energy structural adjustment can help us achieve the carbon intensity target of 2030 under both steady and mid-speed development scenarios. As long as the economic growth rate is higher than 4.2%, the carbon intensity target can be achieved mainly through energy consumption structural change, which provides a way to achieve the carbon neutrality target of 2060. The simulation results from the DSGE model show that energy structural adjustment can also smooth the volatility of the economic fluctuation when exogenous stochastic shocks happened.