Approaches to carbon allowance allocation in China: a computable general equilibrium analysis

Yun-Fei Yao and Qiao-Mei Liang
Additional contact information
Yun-Fei Yao: Sinopec

Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, 2016, vol. 84, issue 1, No 20, 333-351

Abstract: Abstract China is preparing to develop and implement an emissions trading system in its 13th five-year plan. Allowance allocation is one of the key issues to settle during the establishment of this system. This study applies the China Energy and Environmental Policy Analysis model to assess how the allowances should be allocated. Simulation results show that, while impacts on China’s economic development vary according to how allowances are allocated, the negative impacts cannot be mitigated completely, which are between −0.5 and −0.1 % when 5 % of carbon emissions are reduced. In terms of the impacts on the macroeconomy, sectoral output, and capital revenue, results suggest that auctioning the allowances and recycling the revenue to reduce the indirect tax will perform best in alleviating the negative impacts. Meanwhile, impacts of carbon mitigation on international competitiveness can be reduced most in the approach where only key energy- and trade-intensive sectors are able to receive free allowances. However, if citizens’ welfare and quality of life is prioritized, auctioning the allowance and transferring the revenue to households in proportion to their occupation will be the most effective approach; in this case, the negative impacts on rural households’ disposable incomes and welfare will be reduced, and the income gap between rural and urban households will be narrowed.

Keywords: Emissions trade; Primary allowance allocation; Computable general equilibrium; Climate policy (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s11069-016-2352-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:nathaz:v:84:y:2016:i:1:d:10.1007_s11069-016-2352-7

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/11069

DOI: 10.1007/s11069-016-2352-7

Access Statistics for this article

Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards is currently edited by Thomas Glade, Tad S. Murty and Vladimír Schenk

More articles in Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards from Springer, International Society for the Prevention and Mitigation of Natural Hazards
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().