Macroeconomic effect of energy transition to carbon neutrality: Evidence from China's coal capacity cut policy

While the retirement of fossil fuel capacity is an inevitable consequence energy transition to carbon neutrality, policymakers face challenges in setting pace order that policies do not significantly damage economy. This paper designs a dynamic stochastic general equilibrium (DSGE) model examine macroeconomic effects coal cut policy (CCP) shocks on Chinese The results show that: firstly, shock can distort transmission effect supply and demand other factors prices. Secondly, impact different tools system, which economic advanced replacement weakest. Thirdly, short term, no matter tool adopted, CCP will inevitably lead reduction social welfare levels. study suggests government further release more quotas with production efficiency, innovate for industrial structural optimization synergistic environmental regulation. In addition, highlight need market mechanisms accelerate over long run.