The emission reduction effect and economic impact of an energy tax vs. a carbon tax in China: a dynamic CGE model analysis

Zou Lele, Xue Jinjun, Alan Fox (), Bo Meng and Shibata Tsubasa

No 487, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Chinese government commits to reach its peak carbon emissions before 2030, which requires China to implement new policies. Using a CGE model, this study conducts simulation studies on the functions of an energy tax and a carbon tax and analyzes their effects on macro-economic indices. The Chinese economy is affected at an acceptable level by the two taxes. GDP will lose less than 0.8% with a carbon tax of 100, 50, or 10 RMB/ton CO2 or 5% of the delivery price of an energy tax. Thus, the loss of real disposable personal income is smaller. Compared with implementing a single tax, a combined carbon and energy tax induces more emission reductions with relatively smaller economic costs. With these taxes, the domestic competitiveness of energy intensive industries is improved. Additionally, we found that the sooner such taxes are launched, the smaller the economic costs and the more significant the achieved emission reductions.

Keywords: China; Energy policy; Environmental policy; Taxation; Climatic change; Econometric model; Economic conditions; Energy tax; Carbon tax; Climate change; CGE model; Energy intensive industry (search for similar items in EconPapers)
JEL-codes: C13 C15 C54 E37 J21 K32 O44 Q54 (search for similar items in EconPapers)
Date: 2015-01-01
New Economics Papers: this item is included in nep-cmp, nep-cna, nep-ene, nep-env, nep-mac and nep-tra
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Citations: View citations in EconPapers (1)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 487. 2015-01-01

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https://ir.ide.go.jp/record/37689/files/IDP000487_001.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: THE EMISSIONS REDUCTION EFFECT AND ECONOMIC IMPACT OF AN ENERGY TAX VS. A CARBON TAX IN CHINA: A DYNAMIC CGE MODEL ANALYSIS (2018)
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