How to improve the performance of carbon tax in China?. (20th January 2017)

• Record Type: Journal Article
• Authors: Zhang, Zhe; Zhang, Aizhen; Wang, Daoping; Li, Aijun; Song, Huixuan
• Is Part Of: Journal of cleaner production. Volume 142:Part 4(2017)
• Page Start: 2060
• Page End: 2072
• Publication Date: 2017-01-20
• Subjects: Renewable energy subsidy -- CGE model -- Rebound effect -- Competitiveness issues -- Carbon leakage -- Carbon dioxide emission abatement costs; Factory and trade waste -- Management -- Periodicals; Manufactures -- Environmental aspects -- Periodicals; Déchets industriels -- Gestion -- Périodiques; Usines -- Aspect de l'environnement -- Périodiques; 628.5
• DOI: 10.1016/j.jclepro.2016.11.078
• Languages: English
• ISSNs: 0959-6526

Abstract

Abstract: The Chinese government committed to controlling carbon dioxide (CO2 ) emissions and promoting development of non-fossil fuels. Thus, it becomes a top priority for the government to develop effective climate policies. Against such background, this paper develops a new multi-country computable general equilibrium (CGE) model with detailed energy disaggregation. This study evaluates the impact of single policy instrument (carbon tax) and combined policy mixes, in order to investigate driving factors affecting the policy performance. The main findings are as follows. Firstly, the driving factors can be classified into two types. The first type of factors affects cost-effectiveness significantly, while the second type generates considerable effect on emission performance. Secondly, cross-border externalities function as important barriers to the CO2 emission reduction, since they imply extra competitiveness loss and result in considerable carbon leakage. Finally, this paper considers two integrated policy mixes, wherein carbon tax revenue is recycled to reduce capital tax or support clean energy subsidy. These policy mixes can improve both cost-effectiveness and emission performance, and thus perform better than carbon tax alone. In this way, carbon tax revenue can be used to improve the performance. Looking ahead, complicated policy mixes are preferred to improve the performance of China's carbon tax. Highlights: We develop a new CGE model with detailed energy disaggregation. We evaluate impacts of carbon intensity reduction and promoting non-fossil fuels. We compare impacts of alternative integrated policy mixes. We investigate driving factors affecting cost-effectiveness and emission performance. We consider how to design China's carbon tax to improve performance.