Abstract
PurposeEnvironmental problems such as CO2 (Carbon Dioxide) emissions have seriously affected the development of the steel industry, which has urged the industry to adopt a more effective emission reduction policy. This paper aims to analyze the impact of various CO2 emission reduction policies combinations on the economic benefits and environmental changes of the steel industry and to determine the scope of application.Design/methodology/approachTo compare the impact and applicable implementation conditions, a production decision game model that incorporates these two policies has been constructed. Short-, medium- and long-term constraints are set on the emission reduction indicators and the indicators’ changes under various scenarios are compared.FindingsIn the case of a single emission reduction policy, the carbon trading (CT) mechanism is better than the carbon tax mechanism. The mixed carbon trading mechanism is superior to the mixed carbon tax mechanism in terms of total output and subsidies, but worse in terms of overall social welfare, producer surplus and macro losses.Originality/valueThis paper constructs multiple emission reduction and production backgrounds and discusses the impact of the comprehensive implementation of these policies, which is practically absent in previous studies. It is in line with the current industrial policy for stable production and environmental protection and also provides a reference for the formulation of detailed policies in the future.
Highlights
As an important manufacturing sector in China, the Chinese steel industry is well known internationally for its achievements; it faces many problems to be solved
4.1 The results of parameter fitting According to the research of Duan (2019) and the research ideas in this paper, this section analyzes the impact of these two emission reduction mechanisms on the overall indicators of the steel industry at three time points, namely, 2020, 2025 and 2030
The inverse demand curve, emission reduction cost curve, CO2 emission intensity reduction target, production cost, CCS curve, external macro environmental loss caused by CO2 emissions and other functional relationships and parameters have referred to the previous research results (Färe et al, 2007; Lee et al, 2002; Guenno and Tiezzi, 1998)
Summary
As an important manufacturing sector in China, the Chinese steel industry is well known internationally for its achievements; it faces many problems to be solved. Environmental and climate problems (Yang et al, 2020a, 2020b, 2021) have occurred frequently, which has gradually increased the pressure on the steel industry to make strides in energy conservation and emissions reduction. It is clearly stated that it is necessary to gradually establish a production restriction mechanism based on carbon emissions, promote the implementation of marketbased trading policies for carbon taxes and carbon emissions in the steel industry, and implement differentiated industrial policies for companies with different levels of environmental protection governance. Research on carbon tax policy and carbon trading policy is becoming a focus for experts, scholars and policymakers
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