The effects of carbon dioxide, methane and nitrous oxide emission taxes: An empirical study in China

Abstract

China has become the largest producer of carbon dioxide (CO2) and non-CO2 greenhouse gas emissions in the world. However, almost all current Chinese policies are emphasizing the control of CO2 emissions only, and no goals have been established for non-CO2 greenhouse gas emission reductions, China risks missing early opportunities for lower-cost abatement of the latter. Aiming to disclose the different effects of CO2 and non-CO2 greenhouse gas emissions reductions and provide some suggestions for non-CO2 greenhouse gas emissions reduction in China, this paper focuses on identifying the price impacts and transmitting paths among different sectors of imposing CO2, methane (CH4), nitrous oxide (N2O) emission taxes using the Social Accounting Matrix (SAM) model, then further compares the sources of CO2 and non-CO2 greenhouse gas emissions based on the big data from the first national census of pollution sources. When the same emission tax is imposed for every ton of CO2e, the results clearly show that the prices in all sectors have the greatest increase for CO2 emissions tax scenario relative to CH4 and N2O emissions tax scenarios. With respect to sectors with larger CH4 and N2O emissions, price change in sectors with larger CO2 emissions will be responsible for the price change of almost all sectors. Moreover, from the perspective of sources of CO2, CH4 and N2O emissions, CO2 emissions are from almost all industries of the entire economy, and CH4 and N2O emissions are from agriculture, energy mining, and waste. These results indicate that the tax reducing CH4 and N2O emissions will cause lower impacts than the abatement of CO2 emissions. Integrating the current national policies with the above results, Chinese government should also pay more attention to CH4 and N2O emission reduction.