The Economic and Environmental Impact on China of Carbon Tariffs Based on Gage Model

Abstract

This paper analyzes the economic and environmental impact on China of carbon tariffs from the perspective of the taxed countries based on a static global multi-regional economy-energy-environment (3E) CGE model. The results show that carbon tariffs will severely depress China's exports to the Annex I countries, and then have negative impacts on China's macro-economy. In terms of environmental effects, carbon tariffs indeed will reduce carbon emissions of China slightly, while such emission reduction effects will be offset by the increased emissions of Annex I countries led to by carbon tariffs. Carbon tariffs have a serious negative economic impact and very weakly positive environmental impact on the countries imposed carbon tariffs, which should be an important consideration for the reasonability and feasibility of carbon tariffs.