*4.1. The Basic Situation in the BAU Scenario*

The BAU scenario is the benchmark scenario of the paper; that is, almost all results are based on the comparison between the CT/ETS scenario and the BAU scenario. So, the paper needs to report the basic information about the BAU scenario first.

The CO2 emissions in 2060 will be about 16.1 billion tons, increasing by 43% compared with 2020 emissions, which is illustrated in Figure 1. In terms of the primary energy structure, in the BAU scenario in 2060, China's primary fossil energy accounts for 32.0%, and the primary electricity (renewable energy) accounts for 68.0%. The energy structure is much better than the current situation, but there is still a big gap from in carbon neutrality goal.

Because this paper uses a long-term model, we do not consider using Keynesian macro closure conditions but neoclassical macro closure conditions. That is, the factor is fully utilized. Therefore, the main constraints of the whole model come from factor endowment. Thus, in the dynamic process, this paper considers the technological progress and changes in factor endowment (Section 3.2). The changes in capital and labor endowments and technological progress will lead to an increase in GDP. Without carbon constraints, the GDP in the BAU scenario will increase to 739 trillion CNY in 2060, with the primary sectors accounting for 9.3%, the secondary sectors accounting for 25.2%, and the tertiary sectors accounting for 65.5%. In the labor market, the labor population of the primary sectors accounts for 16.9%. Among them, the secondary sectors account for 16.0%, the tertiary sectors account for 65.5%, and the tertiary industry accounts for 67.1%.
