Academic journal article Journal of Sustainable Development

A Simulation Analysis of the Introduction of an Environmental Tax to Develop Biomass Power Technology in China

Academic journal article Journal of Sustainable Development

A Simulation Analysis of the Introduction of an Environmental Tax to Develop Biomass Power Technology in China

Article excerpt

Abstract

Despite rapid growth in the past few decades, biomass power development in China continues to face several barriers, such as a lack of supporting policies and core technologies. This study proposes the introduction of an environmental tax to promote biomass power technology development in China. We construct a dynamic input-output model to evaluate the effects and economic feasibility of an environmental tax, considering the interrelationships among China's economy, energy and environment. The GDP is maximized as the objective function subject to greenhouse gas (GHG) emissions constraints and a series of socio-economic constraints. The model uses 2007 as the base year and 2020 as the target year. The simulation results illustrate that a 10 Yuan/tCO^sub 2^e carbon tax is sufficient to stimulate biomass technology development, in addition to economic development and GHG emissions mitigation. According to the simulation, the total biomass power generation from 2007 to 2020 with the environmental tax will be 2,334 TWh, the annual growth rate of GDP will be 9 percent and the GHG emissions intensity will be 0.15 kgCO^sub 2^e/Yuan, a 46.5 percent reduction compared with 2005 GHG emission intensity levels. Electricity substitution and industrial structure adjustment are two key approaches to achieve the optimization of economic development and GHG emissions mitigation in the model. Furthermore, the introduction of an environmental tax is shown to be economically feasible by the cost-benefit analysis.

Keywords: dynamic input-output model, environmental tax, biomass power technology

(ProQuest: ... denotes formulae omitted.)

1. Introduction

As a renewable energy, biomass power has attracted more attention and has had rapid growth in the past several decades in China (Zhao, 2011). By the end of 2008, the total installed capacity of biomass power generation in China was 3,150 MW. The Chinese government established a development target for biomass power in the "Medium-long-term renewable energy development plan", which stated that the total installed capacity of biomass power should reach 30,000 MW by 2020 (NDRC, 2007). However, the actual progress of biomass power development in China has not been sufficient to meet these targets. In fact, because of low commercial profits, many biomass power plants in China must rely on government subsidies to maintain operations (Zhao, 2012). The reasons for this situation, which are analyzed briefly, are the absence of supporting policies and core biomass power technologies. Due to this lack of incentive policies and proper technologies, the development of the biomass power generation industry has many barriers in China, such as the high construction cost of a biomass power plant, the high cost of raw materials and fewer financing channels. Therefore, in this paper, we propose the introduction of an environmental tax to promote biomass power technology development in China.

The first consideration of this study is biomass power generation technology. There are many types of biomass power technologies, such as municipal waste incineration, gasification power generation, biogas power generation and direct straw combustion, which is the most common technology in China (Zhao, 2012). Considering the typical characteristics of biomass power generation, we chose the advanced domestic technology of direct straw combustion at the "Beiliu Kaidi Biomass Power Project", a registered CDM project. In this paper, 'biomass power technology' refers to this technology. The key technical specifications of the boiler, turbine and generator are obtained from the project design document. The second consideration of this study is the raw material. As the world's largest agricultural country, China has ample straw crop resources (Yang, 2010; Liu, 2007; Liu, 2008; Zhou, 2011). In 2007, the total potential crop output, including food crops, oil crops and cottons, among others, was 658 million tons, and the theoretical production of straw crops was 533 million tons (Yang, 2010). …

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