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Bridging national climate targets and firm-level decisions: An agent-based model of China's steel decarbonization
Xiao Liu1,2, Jinhong Du3, Lingling Lv4
1State Key Laboratory of Environmental Criteria and Risk Assessment, Chinese Research Academy of Environmental Sciences, Beijing 100012, China.
Abstract:
China's steel sector is pivotal to national and global climate goals, yet decarbonization is constrained by entrenched coal-based processes and regional disparities. Top-down and bottom-up models often neglect firm-level heterogeneity and behavioral dynamics. Here, we develop an agent-based model linking policy signals-carbon caps, pollution standards, and resource limits-with firm-level investment decisions. We evaluate four scenarios combining current and strengthened climate and air targets with neutral or accelerated technology progress. All scenarios achieve deep CO2 reductions (90 to 95% by 2060), but only the integrated policy-plus- technology pathway eliminates blast furnaces before midcentury, achieving the steepest declines. Policy- or technology-only pathways entail trade-offs, including lock-in to carbon capture and storage or delayed reductions. Our results show that synchronizing stringent climate policy with rapid technology cost declines is essential to steer China's steel industry toward a carbon-neutral trajectory.
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