low-carbon economy. National carbon market
prices are, therefore, expected to rise after 2020
to enable carbon emissions to peak by 2030.
3.4 Effects of the Pricing Mechanism
on Medium- and Long-Term
Energy Demand
3.4.1 Effects of Future Fossil Energy
Prices on Energy Demand
Based on the historical trend of fossil energy
prices and the current status of the fossil energy
market, we designed three scenarios—High,
Business as usual (BAU) and Low—to analyse
future fossil energy price trends in China’s
energy, economy and environment (3E) model.
The average annual growth rate of future coal, oil
and gas prices will be 2%, 2.3% and 1.7%
respectively in the BAU scenario, 3% for all
three fuels in the high-price scenario, and 1% for
all three fuels in the low-price scenario. The price
trends in the medium and long terms are shown
in Fig. 37 (Table 6).
Figure 38 shows that, the evolution trend of
fossil energy prices has a very significant impact
on future total fossil energy demand. By 2030,
energy demand in the BAU, low-price and
high-price scenarios will be 77%, 98% and 48%
higher respectively than in 2010. By 2050, the
difference will be much greater: 1.67, 2.16 and
2.65 times respectively than in 2010. In the
Fig. 37 Evolution of fossil energy prices in three scenarios
Table 6 Future fossil
energy price scenarios
Average annual increase rate (%)
High
BAU
Low
Coal price
3
2
1
Oil price
3
2.3
1
Gas price
3
1.7
1
Note BAU = Business as usual
Special Report 2: Research on China’s Energy Demand Revolution
253