Carbon Tax In China Research Articles

Research on Carbon Tax in China under Carbon Neutrality

Carbon neutrality has become one of the main goals of addressing climate change on a global scale. As an economic means in China, a carbon tax can promote the transformation of energy structures and reduce greenhouse gas emissions by imposing a certain fee on carbon dioxide and other greenhouse gas emissions. This paper studies how to carry out the energy transition and realize the sustainable development of the country. This paper establishes a theoretical framework for carbon neutrality, carbon tax policy, and energy transition, and elaborates on the reasons for energy transition, the impact of energy transition on the market, the path to carbon neutrality, and China's carbon tax policy. Evaluate China's energy consumption structure from economic, environmental and policy perspectives. This article found that the biggest impact on China's energy consumption structure is the industrial growth rate, followed by GDP, and then carbon dioxide emissions. In order to achieve the long-term goal of global carbon neutrality, the government needs to introduce relevant policies.

Can learning-by-doing offset negative impacts of carbon pricing in China?

This is the first study utilizing carbon tax revenue to the renewable energy generation with Learning-by-doing (LBD) in the CGE model. This investigation demonstrates how induced technologically change (ITC) in the power sector offsets negative impacts on economic growth caused by the carbon tax in China. Business-as-usual scenario (without carbon tax) shows a significant impact of LBD on GDP growth and CO2 emission reduction. Under a policy scenario with carbon tax, the results show that the negative impact on economic growth can be alleviated to less than 0.12%. If total carbon tax revenue was used for the subsidy to wind and solar power, even a positive impact on GDP growth will occur in the long-term. Therefore, the results verified and demonstrated the synergic effect of carbon pricing and the LBD process that economic loss caused by carbon tax could be offset by ITC in the renewable energy power sector. GDP decomposition shows that unexpensive electricity affected by ITC is beneficial to drive development of low-carbon energy, which can mitigate shock of carbon tax on heavy dependence on fossil fuel. This paper also provides policy implications that the LBD process will positively play a key role in energy structural shift under climate policy, making a great effort to climate mitigation.

Feasibility Study of China’s Carbon Tax System under the Carbon Neutrality Target—Based on the CGE Model

In order to cope with the climate problem of global warming and respond to the call of the United Nations to reduce carbon emissions, China has put the goals of carbon peaking in 2030 and carbon neutrality in 2060 forward and has promoted the transformation and upgrading of the economic development mode and the green, low-carbon development path. In international practice, various countries have widely adopted the carbon trading market and tax policy as effective carbon emission reduction mechanisms and tools. In 2012, China implemented a carbon trading pilot project and established a national unified carbon trading market in 2021 based on accumulated experience, but the carbon tax has not yet been introduced. According to the international carbon tax practice and the current situation in China, the introduction of the carbon tax is conducive to the establishment of a sound carbon emission reduction system and the promotion of green and low-carbon development from the macro-control level. In this paper, we analyzed the necessity and theoretical research of carbon tax policy in China and explored the feasibility of a carbon tax in China by combining the internationally advanced carbon tax practice. By establishing a CGE model at the carbon-tax level and using the social accounting matrix (SAM) as the database, we simulated the impact of implementing carbon tax policies under different carbon tax prices on China’s environmental and economic benefits and whether the double-dividend effect of a carbon tax can be effectively realized. The results show that the carbon tax will help reduce carbon emissions and significantly affect carbon reduction. However, in the short term, it has a negative effect on economic development. Accordingly, it is suggested that a scientific carbon tax system should be established according to national conditions, and a carbon tax should be introduced at a lower carbon tax price. The carbon tax should be supplemented by carbon tax subsidies to ensure effective carbon emission reduction so as to alleviate the inhibiting effect on economic development. At the same time, the compound carbon emission reduction mechanism of carbon trading and tax should be improved to lay the institutional foundation for the early realization of the carbon neutrality target.

Exploring the economic impacts of carbon tax in China using a dynamic computable general equilibrium model under a perspective of technological progress

The carbon tax, as one of the environmental regulation tools, is likely to promote technological progress, which is ignored in previous works when evaluating the economic impact of a carbon tax. This study uses the Generalized Method of Moment model to investigate the effect of an environmental tax on total factor productivity and energy efficiency, and takes the effects as approximations of the effects of carbon tax on technological progress into the computable general equilibrium model as well as considering technology diffusion, to analyze the dynamic impact of carbon tax on China's economy growth. A carbon tax policy negatively impacts GDP at the early stage, but technological progress would make GDP impacts “turn negative into positive” in the late stage. With a carbon tax rate of 100 Yuan/ton, the GDP impact becomes positive from the 4th year and rises to 0.3% in 2030. Not all industries can realize the output of “turning negative into positive,” only low-carbon-intensity industries can achieve a clean transition. Overall, this study discusses the dual effects of a carbon tax on technological progress and increasing fossil energy costs, which provides a new perspective for an in-depth discussion of a carbon tax.

The inequality impacts of the carbon tax in China

Previous research has acknowledged that climate change is likely to expand the wealth gap, and climate policies may further increase inequality. Nevertheless, little research has focused on how climate policies affect inequality. To address this, we employ a Computable General Equilibrium (CGE) model to quantify the inequality impacts of the Chinese carbon taxes. Our CGE model results show that tax impacts on inequality are influenced by distribution of climate damages, tax payments, and recycling of tax revenues. Specifically, a positive correlation between income and climate damage induces lower inequality, compared to a zero or negative correlation. Tax payments by high-income households induce lower inequality than tax payments proportional to or independent from income. Recycling tax revenues to low-income households only induces lower inequality than the other recycling schemes. The results imply that relative utility is determined by absolute income, whereas income inequality only has a slight impact on it. In other words, governments could reduce negative feelings about inequality under a climate policy by increasing national income, even if the climate policy may induce higher inequality.

Greening, Pricing and Marketing Coordination for a Complex Three-Level Supply Chain Under the Carbon Tax in China

This paper examines a complex supply chain consisting of a raw material manufacturer, a consumer goods fabricator, a retailer and an end user. A sequential decision game model is constructed under carbon tax regulation, considering multiparty green technology innovation and green product marketing efforts in the supply chain. Using a backward-induction analysis process, the Nash equilibria of the game are obtained. With the help of numerical simulation, the sensitivity analysis of the key parameters affecting system performance is carried out. We find the following results. (i) Carbon tax regulation brings about a new cost burden for supply chain members in different ways, with the largest impact being on the profit of the raw material manufacturer. (ii) The marginal emission reduction effect of carbon tax regulation shows a declining trend. The cost of greening efforts will exceed the carbon tax rate as it continues to rise. (iii) Customer demand is significantly affected by the footprint and energy efficiency of products and is much more relevant for energy efficiency than for footprint in the production phase.

The technical impacts of the carbon tax in China

Despite the significant impacts of technology on the socioeconomic effects of climate policies, many previous researchers neglected the induced technical impacts and thus resulted in biased evaluations of climate policies. Hence, it is important that the induced technology should be endogenized in the policy evaluation framework. The purpose of this paper is the quantification of the technical impacts of the Chinese carbon tax using a Computable General Equilibrium (CGE) model. The technical impacts are denoted by the induced technological change (ITC), which is a function of the energy-use efficiency (EUE), energy-production efficiency (EPE), and nonenergy-production efficiency (ENE). The carbon tax will increase the energy cost share because of the internalisation of the abatement costs. This paper empirically shows that the carbon tax will decrease the energy cost share and production efficiency but increase the energy use and nonenergy production efficiency. Under the carbon tax, the ITC will decrease the energy use and production efficiency but increase the nonenergy production efficiency. The ITC will increase the RGDP, decrease the household welfare, and increase the average social cost of carbon (ASCC). This finding implies that the ITC of the carbon tax is biased towards the technical progress of nonenergy sectors; the emission abatement will become costlier under the ITC impacts. Although the quantification method of the technical impacts was from an existing published paper, the CGE analysis of the ITC impacts of the carbon tax in China is original in this paper.

A comparative study on the environmental and economic effects of a resource tax and carbon tax in China: Analysis based on the computable general equilibrium model

This paper is a comparative study on the effects of a resource tax and a carbon tax. In this paper, we use the computable general equilibrium (CGE) approach to simulate the impact of China's increasing resource tax rate policy and carbon tax policy. The strengths and weaknesses of the two policies are compared from the perspective of energy utilization, air emissions, the macro economy, government tax revenue, household income, and enterprise net profit. A carbon tax leads to a reduction of all kinds of energy consumption. A carbon tax of 1 yuan/ton of CO2 can reduce CO2 emissions by 2100 tons and significantly reduce SO2, NOx, PM2.5, and PM10 emissions. From the perspective of energy utilization, carbon emissions, and pollutant emissions, the effect of a carbon tax is significantly better than that of a resource tax. If the rate of a resource tax rises by 50%, or a carbon tax is levied at the rate of 4 yuan/ton of CO2, China's economy (on a GDP basis) will decline by 0.1%.

The Urbanisation Impacts on the Policy Effects of the Carbon Tax in China

In the literature, very few studies have focused on how urbanisation will influence the policy effects of a climate policy even though urbanisation does have profound socioeconomic impacts. This paper has explored the interrelations among the urbanisation, carbon emissions, GDP, and energy consumption in China using the autoregressive distributed lag (ARDL) model. Then, the unit urbanisation impacts are inputted into the policy evaluation framework of the Computable General Equilibrium (CGE) model in 2015–2030. The results show that the urbanisation had a positive impact on the GDP but a negative impact on the carbon emissions in 1980–2014. These impacts were statistically significant, but its impact on the energy consumption was not statistically significant. In 2015–2030, the urbanisation will have negative impacts on the carbon emissions and intensity. It will decrease the GDP and the household welfare under the carbon tax. The urbanisation will increase the average social cost of carbon (ASCC). Hence, the urbanisation will reinforce the policy effects of the carbon tax on the emissions and welfare.

It is Worth Pondering Whether a Carbon Tax is Suitable for China’s Agricultural-Related Sectors

Studying the characteristics, trends, and evolution of carbon emissions in agricultural related sectors is of great significance for rational formulation of carbon emission reduction policies. However, as an important carbon emission reduction policy, carbon tax has been controversial over whether or not it should be levied on China. Based on this consideration, this paper takes China’s agricultural related sectors as an example and analyzes the degree of carbon tax on macro-environment, macroeconomy, and agricultural sectors during the period 2020–2050 by constructing a 3EAD-CGE (economy-energy-environmental-agricultural-dynamics Computable General Equilibrium) model. The results show that: (1) carbon tax has a time effect, specifically, the short-term effect is better than the long-term. (2) If the incremental rate of carbon tax is carried out alone, it will exert a great influence on the macroeconomy as well as on most of the agricultural related sectors. (3) If a carbon tax is introduced at the same time as indirect taxes are cut (proportionally), the policy will exert a negative impact on agriculture-related sectors that are subsidized. However, the policy will have a positive impact on those nonsubsidized sectors. Finally, based on the results, we put forward some suggestions that are more suitable for the introduction of a carbon tax in China’s agricultural-related sectors.

Optimization of Vehicle Routing Problem with Time Windows for Cold Chain Logistics Based on Carbon Tax

In order to reduce the cost pressure on cold-chain logistics brought by the carbon tax policy, this paper investigates optimization of Vehicle Routing Problem (VRP) with time windows for cold-chain logistics based on carbon tax in China. Then, a green and low-carbon cold chain logistics distribution route optimization model with minimum cost is constructed. Taking the lowest cost as the objective function, the total cost of distribution includes the following costs: the fixed costs which generate in distribution process of vehicle, transportation costs, damage costs, refrigeration costs, penalty costs, shortage costs and carbon emission costs. This paper further proposes a Cycle Evolutionary Genetic Algorithm (CEGA) to solve the model. Meanwhile, actual data are used with CEGA to carry out numerical experiments in order to discuss changes of distribution routes with different carbon emissions under different carbon taxes and their influence on the total distribution cost. The critical carbon tax value of carbon emissions and distribution cost is obtained through experimental analysis. The research results of this paper provide effective advice, which is not only for the government on carbon tax decision, but also for the logistics companies on controlling carbon emissions during distribution.

How to improve the performance of carbon tax in China?

The Chinese government committed to controlling carbon dioxide (CO2) emissions and promoting development of non-fossil fuels. Thus, it becomes a top priority for the government to develop effective climate policies. Against such background, this paper develops a new multi-country computable general equilibrium (CGE) model with detailed energy disaggregation. This study evaluates the impact of single policy instrument (carbon tax) and combined policy mixes, in order to investigate driving factors affecting the policy performance. The main findings are as follows. Firstly, the driving factors can be classified into two types. The first type of factors affects cost-effectiveness significantly, while the second type generates considerable effect on emission performance. Secondly, cross-border externalities function as important barriers to the CO2 emission reduction, since they imply extra competitiveness loss and result in considerable carbon leakage. Finally, this paper considers two integrated policy mixes, wherein carbon tax revenue is recycled to reduce capital tax or support clean energy subsidy. These policy mixes can improve both cost-effectiveness and emission performance, and thus perform better than carbon tax alone. In this way, carbon tax revenue can be used to improve the performance. Looking ahead, complicated policy mixes are preferred to improve the performance of China's carbon tax.

Improving the Legal Implementation Mechanisms for A Carbon Tax in China

Improving the Legal Implementation Mechanisms for A Carbon Tax in China

An investigation on life-cycle energy consumption and carbon emissions of building space heating and cooling systems

Building space heating and cooling system built-in the town's infrastructure is an important factors for building energy consumption and carbon emission source. In order to understand the roles of building energy system in the global warming, this paper established a mathematical model of energy consumption and carbon emission for the building energy system. Two district heating systems for residential buildings and nine space heating and cooling systems for public buildings were selected to analyze their energy consumption, carbon emission and economy based on a calculating model. The results showed that the two residential building cases B01 and B02 of life-cycle carbon emissions are 743.60 kg/m2 and 620.98 kg/m2, the public building cases B03∼bl1 of life-cycle carbon emissions are 800.15–1377.85 kg/m2. Equipment materials production, installation and maintenance phase embodied energy and carbon emissions proportion reached up to 6%∼14%, energy conservation and emissions reduction potential should not be neglected. The application of some renewable energy reaches a certain effect of energy conservation and emissions reduction in building, but the life cycle cost of emission reduction is much higher than carbon tax in China.

Addressing the competitiveness effects of taxing carbon in China: domestic tax cuts versus border tax adjustments

This study focuses on the international competitiveness effects of levying a carbon tax in China. Based on a computable general equilibrium model, this study analysed the impacts of a carbon tax on different sectors from the aspect of changes in market shares of domestic producers in the domestic markets and changes in exports. The effects of different measures, including domestic tax cuts and border tax adjustments, in alleviating the unfavourable competitiveness impacts were also analysed and compared, as were the impacts of different tax schemes on the macro-economy, sectoral profits and carbon emissions. The results show that without any complementary measures, a carbon tax would negatively shock the domestic market shares and exports of almost all tradable sectors and the profits of almost all sectors. As for cushioning the unfavourable effects, the domestic tax cuts are able to ease the negative impacts on the domestic market shares and exports of almost all tradable sectors. Moreover, the unfavourable impacts of domestic tax cuts on both the macro-economy and the sectoral profits are obviously smaller than those of the other schemes, regardless of the use of the same tax rate or emission reduction amount. Among the border tax adjustment measures, the best performance in general corresponds to the measure purely implementing adjustments on exports.

Optimal carbon taxes in carbon-constrained China: A logistic-induced energy economic hybrid model

Carbon tax is an effective option for internalizing climate change and correcting market failure, an optimal set of carbon taxes can result in superior carbon mitigation. Then what is the optimal trajectory of carbon tax under various carbon-constrained scenarios, and what are the impacts of carbon controls on the economy and performance of carbon-free technologies are important questions to be addressed. We construct an energy–economy–environment aggregated model of China, combining top–down and bottom–up modeling and introducing revised logistic curves for enriching technical details. We also propose four carbon-constrained scenarios based on representative international carbon allocation plans. Our analysis shows that the optimal carbon tax in China is a monotonically increasing one, following a classical, S-shaped pattern. Carbon space constraints play an important role in promoting development of carbon-free technologies, while the substantial transition from fossil fuels to non-carbon energy would not happen before 2040, making clear that it will take at least 30 years to promote the development of carbon-free technologies. However, present energy-saving and efficiency-improving measures ensure that China is capable of achieving the voluntary goal of reducing carbon intensity in 2020 by 40–45% of what they were in 2005; nevertheless, introducing some carbon controls is necessary to fulfill the task of carbon emissions reduction in the Chinese Twelfth Five-Year Plan.

Assessing the Distributional Impacts of Carbon Tax among Households across Different Income Groups: The Case of China

Employing the improved China Energy and Environmental Policy Analysis (CEEPA) model, a recursive dynamic computable general equilibrium model, this study aims to examine the distributional impacts of a carbon tax in China on households over different income groups. The effects of different complementary measures were also analysed. The results indicate that without any protections for households, a carbon tax will widen the income and welfare gap not only between urban and rural but also within urban groups, though it could have a weakly progressive effect within the rural. If the carbon tax revenue is used to reduce indirect tax whilst appropriately increasing government transfers to rural households and vulnerable urban groups in proportion to population, the distributional deterioration caused by the carbon tax could be effectively mitigated, and the negative impact on the living standards of households over all income groups could be alleviated while maintaining emission reductions and minimising the overall socio-economic impacts.

Drawing Lessons from Foreign Experiences and Levying Carbon Tax in China at the Proper Time

Global warming is the top ten environmental problem of the world, and the greenhouse effect caused by a large number of CO2 emissions from human society is the root of climate change. Currently, the global warming becomes serious and has become the crisis and challenge of all the world. Low carbon economy is the best mode of coping with the global warming and realizing sustainable development of economy and society. In many policies to promote low carbon economic development, various related carbon tax policies and regulations are still the most dependent means of every country. The carbon tax levied by part of OECD countries is worthy of our reference.

CGE Simulation for Levying Carbon Tax in China and International Experience of Levying Carbon Tax

Abstract Levying carbon tax is conducive to reducing carbon dioxide emissions and protecting the environment. The author firstly reviewed some relevant empirical studies on carbon tax both home and abroad, and then established the CGE model and simulated levying carbon tax in China. The study found that levying carbon tax would have little impact on China’s economy: in a short- term, China’s GDP might decrease by 0.51%, while in a long- term it might decrease by 0.08%; however, the carbon dioxide emissions would be substantially reduced. Meanwhile, levying carbon tax has some negative impact on the output of each industry in the very economic structure; of this, the mineral extractive industries would be influenced the most. Then the author summarized experience of levying carbon tax in foreign countries.

An analysis on the short-term sectoral competitiveness impact of carbon tax in China

Market-based instruments, particularly carbon tax, have recently drawn the attention of Chinese government by their cost-effective contribution to the achievement of China's climate targets. Most of the recent policy proposals have focused on its long-term impact. However, particularly for policy makers, both long term and short term effects of carbon tax would be necessary when determining tax rates. We provided a detailed analysis of short-term impacts of carbon tax on sectoral competitiveness in this paper. We divided China's economy into 36 sectors, based on its 2007 input–output table, in order to examine the ratio of carbon tax added costs to sector GDP. We were thus able to determine the impact level of a carbon tax on each sector. We then divided the sectoral trade impact into domestic competitiveness with regards to foreign imported products and international competitiveness external to the Chinese domestic market. We found that a high tax level (100 yuan/t CO 2) may necessitate compensatory measures to certain highly affected industries, and that a low tax rate (10 yuan/t CO 2) would generate few competitiveness problems for all industries and may therefore be considered as an appropriate starting point.