The Economic impact of different carbon tax revenue recycling schemes in China: A model-based scenario analysis

Yu Liu () and Yingying Lu ()

Applied Energy, 2015, vol. 141, issue C, 96-105

Abstract: As an important policy instrument for climate mitigation, the carbon tax policy design and its consequent social-economic impact calls for more research. In this paper, a dynamic Computable General Equilibrium (CGE) model – CASIPM-GE model is applied to explore the impact of a carbon tax and different tax revenue recycling schemes on China’s economy. Simulation results show that the carbon tax is effective to reduce carbon emissions with mild impact on China’s macro economy. In particular, a production tax deduction can be used to recycle the carbon tax revenue if the government wants to reduce the cost of a carbon tax; however, a consumption tax deduction may help the economy to restructure and may benefit the long-run emissions reduction. In terms of industrial output, most industries are negatively affected; sectors with large share of exports are subjected to negative shocks if there is consumption tax deduction financed by the carbon tax revenue. The study suggests that carbon revenue recycling scheme is important in designing the carbon tax policy: a well-designed scheme can help reduce the cost of a carbon tax.

Keywords: Carbon tax; Tax revenue recycle; Economic impact; CGE model; Scenario analysis (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (102)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306261914012896
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:141:y:2015:i:c:p:96-105

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

DOI: 10.1016/j.apenergy.2014.12.032

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().