Simulation study on the effect of differentiated carbon tax adjustment on CO2 emissions reduction in China from the perspective of carbon footprint

Abstract

The carbon tax is an efficient environmental and economic method for lowering CO2 emissions, and effective carbon taxes should not only aim to reduce CO2 emissions but also consider their impact on socio-economic and resource utilization. The carbon footprint reflects actual carbon emissions and trade connections between sectors, providing a reference for levying carbon taxes on different sectors and examining their impact on the economy. This study utilizes the 2017 non-competitive input-output table of China and CO2 emissions and water consumption data from 27 sectors. Firstly, the research calculates carbon and water footprints of each sector through input-output analysis. Then, utilizing the input-output price model, the article compares the effect of differentiated carbon taxes on CO2 emissions and GDP across sectors in China, examining both direct carbon emissions and carbon footprint. Lastly, the survey constructs a carbon tax optimization model, aiming to maximize carbon and water footprint reduction while minimizing reduction in labor compensation. The key findings are: (1) Different sectors display varying characteristics in terms of direct carbon emissions and carbon footprints. 19 sectors exhibit higher direct carbon emissions than carbon footprints, while 8 sectors show the opposite. (2) Implementing carbon taxes on all sectors in China based on direct carbon emissions and carbon footprints effectively reduces CO2 emissions. However, at the same tax revenue, a reduction of 10^4 yuan in GDP leads to a further decrease of 0.47 × 10^6 tons of CO2 emissions from the carbon footprint perspective compared to direct carbon emissions. (3) In the optimal differentiated carbon tax plan based on carbon footprints, water production sector bears the highest carbon tax at 5.45 yuan/ton, while electricity production sector bears the lowest at 0.1 yuan/ton. This plan declines CO2 emissions by 7.82% and water consumption by 6.21%, but also results in a 0.02% decrease in GDP. The research findings recommend that sectoral differentiated carbon taxes consider economic development and resource impacts. Implementing refund policies to compensate for the economic losses caused by carbon taxes is essential, while also conserving resources and reducing CO2 emissions. These recommendations provide valuable guidance for the future introduction and implementation of differentiated carbon tax policies.