Analysis of the Environmental and Socio-economic Benefits of Introducing Cleaner Vehicles in China: Policy Implications

Along with its impressive economic growth China has experienced not only serious environmental pollution but also a very rapid increase in Green House Gas emissions and is now the largest emitter of CO2. Together with the power and steel sectors the transportation sector is the main contributor to CO2 emissions. In addition the transportation sector is also associated with air pollution and health damage. In order to address these challenges, at the COP15, the Chinese government set the target to decrease its CO2 emission per GDP by 40%-45% by 2020 compared with 2005 levels and increase non-fossil fuels rate at primary energy sector of 15%. The government has also put especial efforts to reduce air pollution through the Five Year Plans by introducing targets to reduce SO2, NOx, PM, among others. In order to determine the feasibility to reduce GHG emissions this research evaluates the potential of environmentally friendly motorized road vehicles (Hybrid Vehicle and Electric Vehicle). The research proposed 4 scenarios and designed social-economic model & environment model & automotive model based on Input-Out analysis. The results show that HV could be the most suitable option for promoting both GHG reduction and GDP increase with 1% GDP per GHG Emission (GpE) increase under 0.23 ton /Yuan carbon tax rate in China in the short term. The results of the study also show that these options should be followed by a transition to introduce EV in the long term.