Economic assessment of biodiesel pathways for carbon neutrality: Scenario analysis of China’s transportation sector

Abstract

The advancement of global endeavors to mitigate climate change is largely influenced by developments within China’s transportation sector. This study focuses on the crucial role of biodiesel as a biofuel in China’s transportation sector and its significant contributions to China’s carbon neutral target. Employing the Long-range Energy Alternative Planning System, this paper formulates five distinct scenarios encompassing the prevailing trend, the promotion of B5 (5% biodiesel blend) and B10 (10% biodiesel blend), China’s existing policy framework, European Union policy portfolio, as well as alternative biofuels. Our analysis reveals that all scenarios exhibit varying degrees of CO2 emissions reduction by the year 2040, with the EU scenario achieving the largest absolute reduction in emissions (about 8.6% of China’s peak annual emissions). The B5-B10 scenario presents a more significant reduction in CO2 emissions compared with the alternative biofuel scenario, although it proves to be less effective in addressing other pollutant emissions. Furthermore, through policy instruments such as a 70% value-added tax (VAT) rebate and informal regulations driven by public participation in waste cooking oil recycling, China could reduce biodiesel production costs by approximately $1,800 per ton annually. These findings underscore the global implications of China’s low-carbon transportation strategy and highlight the impact of integrating both formal environmental policies and informal public engagement in shaping the sustainable development of China’s transportation sector.