What kind of enterprises and residents bear more responsibilities in carbon trading? A step-by-step analysis based on the CGE model

Abstract

This paper provides a new analytical framework interpreting the model results from a computable general equilibrium model. The study takes China's Emission Trading Scheme (ETS) as an example, applying the China Energy-Environment-Economy Analysis model to study the impact mechanism of the ETS. The study constructs three types of ETS coverage, analyzes the price fluctuation, considers the impact on macro indicators, and finally calculates the impact on residents, factor flow, enterprises, and households. The results show that the ETS only covering electricity may lead to the highest rise of consumer price index and most significant reduction of actual purchasing power; rural households may suffer more from ETS negative impact because of the consumption structure; ETS may create new job opportunities in the ETS-covered sectors, especially in energy-intensive industries for low carbon careers. However, the outputs of these industries still decrease. It should be noted that carbon trading may widen the urban-rural gap from both the source side and consumer side.