Work

CCS deployment policy choices under regional heterogeneity: Economy-wide impacts and spillovers in China

Year: 2026

Type: article

Abstract: Carbon capture and storage (CCS) is critical for decarbonizing the fossil-energy power sector, the world's largest source of greenhouse gas emissions. However, how deployment responsibilities should be allocated across heterogeneous regions to deliver economy-wide economic and environmental benefits remains poorly understood. This study develops an integrated optimization–multi-regional input-output–computable general equilibrium (OP-MRIO-CGE) framework to evaluate the economic outcomes and emissions reduction effects of alternative regional CCS deployment policies, emphasizing cross-regional spillovers and implications for policy implementation. Using China as a case study, results show that outcomes are highly sensitive to regional responsibility allocation. Scenario 6 formulates deployment as a multi-objective problem maximizing decarbonized fossil-energy power generation and minimizing total CCS deployment cost. The objectives are evaluated separately through Pareto dominance, without normalization or objective weights, producing non-dominated allocations rather than a unique optimum. One allocation is randomly selected as the reference solution before its downstream MRIO-CGE outcomes are assessed, and sensitivity analysis covers the entire retained Pareto set. This reference solution reduces economy-wide CO 2 emissions by approximately 0.379 billion tonnes in 2030, increases national GDP by approximately USD 0.14 trillion, and improves consumer welfare by approximately USD 610 million. Concentrated CCS deployment in the Bohai Rim and the Junggar Basin increases emissions in non-host regions, including Sichuan, Hubei, and Anhui, while economic output losses occur in Shaanxi, Guangdong, and Jiangsu. These findings provide a quantitative basis for coordinated multi-regional CCS deployment and targeted complementary policies, offering an analytical framework applicable to other large, spatially heterogeneous economies pursuing deep decarbonization.

Source: Energy Policy

DOI: 10.1016/j.enpol.2026.115616

Authors: Kun Xiao, Bolin Yu, Fei Li

Institutions: Hubei University of Technology, Hong Kong Polytechnic University, Zhongnan University of Economics and Law

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Affordable and clean energy, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,940