Urban Green Transition and Carbon Peak Targets: Insights from Shanghai's Dynamic Simulation Research

Urban Green Transition and Carbon Peak Goals: Insights from Shanghai's Dynamic Simulation Study

As global urbanization accelerates and energy demand continues to rise, urban carbon emissions have become a central issue in climate change discussions. As one of China's most densely populated and economically dynamic megacities, Shanghai faces the dual pressure of maintaining growth while achieving deep emission reductions. A recent study used system dynamics as a tool to simulate Shanghai's carbon emission trajectory during its green transition, providing empirical reference for climate action at the city level.

Industry Background: Urban Emission Reduction Becomes a Key Battleground for Global Climate Policy

According to data from the International Energy Agency (IEA), direct and indirect carbon emissions from cities account for more than two-thirds of global energy-related emissions. At the 75th session of the United Nations General Assembly, China formally proposed the goals of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060. Subsequently, the State Council issued the "Opinions on Promoting Green Development in Urban and Rural Construction," clarifying that a system and mechanism for green development in urban and rural construction should be initially established by 2025. In this context, how cities can decouple economic growth from carbon emissions has become a frontier issue in energy transition research.

Shanghai, as China's largest economic center, has a permanent population of over 24 million, with energy consumption highly concentrated in the industrial, transportation, and building sectors. According to the "Shanghai Urban Master Plan (2017–2035)," Shanghai has proposed achieving a carbon emissions peak by 2025. This goal requires not only policy promotion but also scientific assessment of the emission reduction potential of various urban systems.

Current Development Dynamics: System Dynamics Model Reveals Peak Pathway

A study published in *Humanities and Social Sciences Communications* used the IPCC inventory method to account for carbon emissions from energy consumption in Shanghai from 2014 to 2019, and built a system dynamics model (SD model) of urban green transition based on this. The study divided the urban system into five subsystems—economy, energy, population, technology, and policy—to analyze the flow of carbon across sectors and simulate emission trends under different development scenarios from 2020 to 2025.

The core findings of the study are as follows:

1. Model validity: The dynamic model proved reliable in predicting carbon emissions during urban green transition, capturing feedback relationships among systems. 2. Peak feasibility: Based on Shanghai's current green transition trajectory, the city is expected to achieve its carbon peak target by 2025, though the timing and peak level vary by scenario. 3. Path divergence: Combinations of factors such as economic growth rate, energy mix, population size, and intensity of carbon trading policies significantly affect the peak time and emission reduction outcomes. Single measures are unlikely to suffice; systematic adjustments are needed.

The study also noted that carbon trading policy, as an important market-based tool, can effectively guide high-emission industries to reduce emission intensity, but it must be coordinated with industrial structure upgrading, energy efficiency improvement, and renewable energy deployment.## Impact on the Energy System: Reshaping Urban Power Structure and Operation Patterns

Shanghai's path to achieving carbon peak is essentially a structural transformation of the urban energy system. Research shows that energy consumption is the main source of carbon emissions, making the decarbonization of the power sector a key focus of the transition. Going forward, Shanghai needs to reshape its energy system in the following aspects:

• Power supply structure: Expand the installed capacity of renewable energy such as local photovoltaic, offshore wind, and biomass, gradually replacing fossil fuel power generation. As the share of new energy increases, the power system's requirements for flexibility and regulation capability will significantly increase.
• Grid and energy storage: The large-scale integration of distributed photovoltaics and electric vehicles requires the urban distribution grid to upgrade to a bidirectional interactive mode, and energy storage plays an increasingly prominent role in peak shaving, valley filling, frequency regulation, and voltage regulation.
• Electrification of end-use energy: Electrification in areas such as building heating and transportation will increase urban electricity demand, but if the degree of clean power generation is insufficient, the problem of carbon emission transfer will emerge.

The research also emphasizes that the carbon trading mechanism uses price signals to guide enterprises in optimizing energy management and encourages high-carbon industries to invest in low-carbon technologies, thereby reducing emission reduction costs at the system level.

Challenges Ahead: The Transition Is Not a Smooth Path

Although Shanghai has the potential to achieve carbon peak earlier, the challenges revealed by the research cannot be ignored:

• Insufficient energy storage and flexible resources: The intermittency of renewable energy requires cities to be equipped with adequate energy storage systems, but current battery storage costs remain high, and long-duration energy storage technologies are not yet mature.
• Transmission networks and cross-regional coordination: Shanghai has limited local renewable energy resources and needs to import green electricity from other provinces, but the construction and coordination of cross-regional transmission channels involve the interests of multiple provinces and face institutional barriers.
• Financing and investment gaps: The investment demand for green infrastructure is enormous. Although green bonds and carbon finance are developing rapidly, the profit models are not yet sound, and social capital participation needs to be improved.
• Policy uncertainty: The allocation of carbon allowances, carbon price fluctuations, and the alignment between local and central policies can all affect corporate expectations and long-term investment decisions.
• Technological maturity: Emerging technologies such as hydrogen have not yet achieved economic scale, and deep industrial decarbonization technologies are still at the demonstration stage.

The research points out that the timing and peak level of carbon peak vary under different development scenarios, meaning that policymakers need to dynamically adjust pathways according to actual conditions rather than locking in a single plan.

Future Outlook: A Vision of Cities Leading the Net-Zero Transition

• Looking ahead five to twenty years, the green transformation of Shanghai and other Chinese cities will show the following trends:
• Leapfrog changes in the energy structure: By 2030, the share of non-fossil energy in primary energy consumption will rise significantly, with wind and solar power becoming the main sources of newly installed capacity. Urban energy systems will shift from "supply follows demand" to "demand follows supply," requiring the establishment of more intelligent dispatch systems.
• Continued expansion of green investment: Carbon peak and carbon neutrality will drive tens of trillions of RMB in investment, concentrated in grid upgrades, energy storage deployment, hydrogen infrastructure, and carbon capture, utilization, and storage (CCUS). ESG capital will profoundly influence the financing models of urban infrastructure projects.
• Integration of carbon markets and policies: The national carbon market will gradually include more industries, and at the city level, more refined carbon budgets and carbon inclusive mechanisms may be introduced to unlock the emission reduction potential of public participation.
• Regional coordination and global competition: Cities will no longer transition in isolation but will reduce carbon emissions collaboratively through metropolitan circles. As the leader of the Yangtze River Delta, Shanghai's green technology experience is expected to be exported to surrounding cities, forming a regional low-carbon industrial cluster.