Abstract
Carbon emission reductions and sustainable development have become hot issues in international conferences. As the most direct instrument for carbon emission reductions, the carbon tax has not been favored by policymakers because of its negative effect on the economy. To achieve low-carbon sustainable development, we use a computable general equilibrium (CGE) model to simulate carbon tax recycling under different energy transfer efficiency improvements to achieve triple dividends of carbon emission reductions and social welfare improvement. This paper contributes to the literature on recycling carbon tax for triple dividends in China. The simulation has three main findings: (i) the carbon tax revenue recycling toward reducing the resident income tax rate yields triple dividends without any energy transfer efficiency improvement; (ii) the losses of GDP and social welfare are exaggerated. Meanwhile, the carbon tax brings down carbon emissions and total carbon intensity of GDP with a mild impact on the Chinese economy; (iii) the improvement of energy transfer efficiency demonstrates the advantages of recycling carbon tax and is essential for achieving triple dividends. Thus, we propose the following policy recommendations: (i) the pilot carbon tax mechanism should be launched in high-carbon sectors (such as coal) and then implemented in other industries gradually; (ii) the government should strongly support the technological improvement of energy transfer efficiency in order to achieve sustainable development.
Highlights
Energy is the driving force for the rapid development of an industrial economy
Scenario 1 is an independent policy of carbon tax without any revenue recycling
Briefly speaking, neither triple dividends nor double dividends have been realized in the CT levy, the decline of GDP and social welfare is smaller than the decline of carbon emissions
Summary
Energy is the driving force for the rapid development of an industrial economy. massive energy consumption, especially fossil fuel burning, triggers excessive carbon emissions, endangering the environment on which humans depend. To achieve the peak of carbon emission before 2030 and make a positive contribution to global climate change measures, China must adhere to a green and low-carbon sustainable development model. Levying a carbon tax will increase the price of energy factors On one hand, it will reduce energy use and promote fossil fuel conversion to clean energy; on the other hand, it will encourage enterprises to develop green and low-carbon technologies (low consumption, low emissions, and high efficiency). In whether a carbon tax can produce triple dividends (economic growth, carbon reduction, social welfare improvement) and achieve sustainable development, the recycling methods of carbon tax revenue play a decisive role. To achieve the sustainable development of low-carbon economic growth and social welfare improvement, our research constructs a computable general equilibrium model (CGE).
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