UC Berkeley

We present an integrated model, SWITCH-China, of the Chinese power sector with which to analyze the economic and technological implications of a medium to long-term decarbonization scenario while accounting for very-short-term renewable variability. On the basis of the model and assumptions used, we find that the announced 2030 carbon peak can be achieved with a carbon price of ∼$40/tCO2. Current trends in renewable energy price reductions alone are insufficient to replace coal; however, an 80% carbon emission reduction by 2050 is achievable in the Intergovernmental Panel on Climate Change Target Scenario with an optimal electricity mix in 2050 including nuclear (14%), wind (23%), solar (27%), hydro (6%), gas (1%), coal (3%), and carbon capture and sequestration coal energy (26%). The co-benefits of carbon-price strategy would offset 22% to 42% of the increased electricity costs if the true cost of coal and the social cost of carbon are incorporated. In such a scenario, aggressive attention to research and both technological and financial innovation mechanisms are crucial to enabling the transition at a reasonable cost, along with strong carbon policies.