How will technical progress in electric vehicles affect carbon marginal abatement costs? A CGE analysis incorporating learning-by-doing

Abatement costs represent a principal concern of mitigating climate change and technical progress pivotally influences abatement costs. This study intended to explore the impact of technical progress in electric vehicle (EV) industry on China's marginal abatement cost curves (MACCs), examine the technology diffusion effects on sectoral MACCs, and assess the total abatement costs and cost-saving effects for different scenarios to achieve China's NDC targets. Therefore, this study applied a computable general equilibrium model with a detailed transportation module and incorporated the learning-by-doing-based endogenous technical progress of EV industry. Results revealed that, first, technical progress of EVs can effectively reduce China's MACs. The faster pace of progress and the earlier technical changes result in lower MACs for a specific abatement amount in a given year. For example, the MAC under the high learning-by-doing (H_LBD) scenario would decline by 14.3% at the 40% emission reduction level in 2050. Second, technical progress of EVs can significantly reduce sectoral MACs including in the transportation, petroleum and crude oil industries (decreasing by 27–73% under H_LBD scenario at the 40% abatement level in 2050) but can trigger increases in the MACs of electricity, coal and ferrous sectors (increasing by 4.8–43.3% under H_LBD scenario at the 40% abatement level in 2050). Thus, the emission reductions attained by promoting EVs may be partially counteracted. Third, the government can utilise the differential temporal distribution characteristics of abatement costs and cost savings to appropriately reduce the intensities of the existing abatement policies with the degree of technical progress.