The effect of carbon tax on carbon emission abatement and GDP: a case study

Xiao Liu, Yee Leung (), Yuan Xu and Linda Chor Wing Yung
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Xiao Liu: The Chinese University of Hong Kong
Yee Leung: The Chinese University of Hong Kong
Yuan Xu: The Chinese University of Hong Kong
Linda Chor Wing Yung: The Chinese University of Hong Kong

Journal of Geographical Systems, 2017, vol. 19, issue 4, No 6, 399-414

Abstract: Abstract Carbon tax has been advocated as an effective economic instrument for the abatement of CO2 emission by various countries, including China, the world’s biggest carbon emission country. However, carbon emission abatement cannot be done while ignoring the impact on economic growth. A delicate balance needs to be achieved between the two to find an appropriate pathway for sustainable development. This paper applies a multi-objective optimization approach to analyze the impact of levying carbon tax on the energy-intensive sectors of Guangdong province in China under the constraint of emission reduction target. This approach allows us to evaluate carbon emission minimization while maximizing GDP. For policy analysis, we construct five scenarios for evaluation and optimal choice. The results of the analysis show that a lower initial carbon tax rate is not necessarily better, and that a carbon tax is an effective means to reduce CO2 emissions while maintaining a certain level of GDP growth.

Keywords: Carbon tax; CO2 emission; Industrial sector; Multi-objective optimization (search for similar items in EconPapers)
JEL-codes: Q4 Q5 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10109-017-0254-1

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