ANALYSIS OF THE SYNERGISTIC EFFECT OF CARBON TAXES AND CLEAN ENERGY SUBSIDIES: AN ENTERPRISE-HETEROGENEITY E-DSGE MODEL APPROACH

Qianyang Tu and Ying Wang

Chapter 8 in Asian Mitigation:Insights, Mitigation Actions, Strategies and Policies for Asian Economies, 2025, pp 163-190 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The application of clean energy is one effective way to alleviate the economy’s dependence on fossil energy while reducing greenhouse gas (GHG) emissions. However, the complementary and synergistic effects of environmental policy in clean energy promotion remain controversial. This paper aims to investigate the role of structural carbon taxes and clean energy subsidies in low carbon transition. Heterogeneous environmental dynamic stochastic general equilibrium (E-DSGE) approach with firm heterogeneity is applied to describe the impact path of structural environmental policy on China’s environmental-economic system. The results show that the structural carbon emission reduction policy has synergistic effects and can balance the relationship between energy demand and economic growth. Furthermore, distinguishing production technology and green innovation technology can promote energy-saving enterprises and improve the industrial structure. This paper might be the first attempt to discuss the synergistic effects of climate policy based on heterogeneous E-DSGE model.

Keywords: Climate Mitigation; Climate Policy Assessment; Climate Change Economics; DSGE; CGE; LEAP; Input-output Model; LCA Analysis; GHG Emissions; Greenhouse Gases; Regional Studies; Policy Measures; Asia; Paris Agreement; Emissions; Carbon; Carbon Emissions; Carbon Neutrality; Decarbonisation; Climate Goals; Mitigation Strategy; Emissions Trading Scheme; China; Green Energy; Global Warming; Climate Change; Carbon Footprint (search for similar items in EconPapers)
JEL-codes: O53 Q52 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2025
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