CGE model-based analysis of the neutralized hybrid carbon policy and its decomposed effects on economic growth, carbon reduction, and energy utilization costs

Abstract

The hybrid policy is a flexible policy tool that combines features of carbon trading and carbon taxation. Its economic and environmental effects under China’s background are still not studied in detail. Given the exogenous carbon reduction targets, carbon prices, and carbon tax-rates, by computable general equilibrium modeling methods and factor decomposition methods, this article investigates direct and cascaded effects of the hybrid policy on economic growth, energy utilization, and carbon emission on the national level and the sector level, with China’s national input–output data-set. Stepwisely, policy scenarios with irrational estimated results are selectively excluded based on comprehensive evaluation among economic, carbon reduction and other policy targets. As a result, against national economic conditions in 2007, the hybrid policy, with a carbon reduction target of −10%, a carbon tax-rate of around ￥10, and a ceiling carbon price of ￥40, is highly recommended, because of its significant lower ec...