China's Green Finance Policies Show Promise for Low-Carbon Energy Transition

⚡ AI Executive Summary

Researchers employed computable general equilibrium modeling to evaluate how China's renewable energy certificates trading, fossil fuel use rights trading, and renewable energy subsidies affect the transition to a low-carbon economy. The analysis examined sectoral impacts, GDP effects, and carbon emission reductions across multiple policy scenarios. The findings suggest that fossil fuel use rights trading produces stable outcomes across industries, though short-term economic impacts require subsidy support. Policy success hinges on sustained government investment in innovation and structural economic shifts toward services and renewables. For power systems, these results underscore the importance of complementary support mechanisms—certificates alone may create short-term headwinds for grid operators and power-intensive sectors. The study indicates that integrated policy packages, rather than isolated interventions, are essential for managing the demand and supply transitions in electricity systems. These insights extend beyond China, offering developing economies a framework for balancing low-carbon objectives with industrial stability during energy transitions.