An Economic and Environmental Impact Analysis of Carbon Tax Policies: A Case from Inner Mongolia

Abstract

On the basis of the standard CGE model, the paper built and extended the regional energy environment of the dynamic CGE model, which can be applied to calculate carbon emissions not only from energy consumption but also from production process. It set seven scenarios of carbon policies by adopting the fixed tax rate, progressive tax rate, independent carbon tax rate, and balanced carbon tax respectively. The results show that the progressive tax rate has less impact on regional economy, but plays a constant role of energy conservation and emissions reduction in the long term. Although independent carbon tax can reduce CO2emissions effectively, it has strong negative impact on the domestic economy. The balanced carbon tax rate policy realizes the “double dividend” of carbon tax by reducing the intensity of CO2emissions and increasing the welfare and income of the residents.