Carbon Tax Policy Research Articles

Reversing climate policy stereotypes: Evidence from an energy-dependent region and China's major economic circles

Achieving decarbonization and industrial transformation in typical energy-dependent regions is a crucial step in mitigating regional climate change. This study constructed a factorial carbon policy equilibrium effect model (FCEE) that integrated input–output analysis, a computable general equilibrium model, factorial analysis, multi-regional input–output, and ecological network analysis. This work explored the internal impact of a composite carbon tax policy that considered the endogenous driving forces of the socioeconomic system on Shanxi Province, a typical energy-dependent region in China, as well as the cascading external effects on China's major economic circles. A significant interaction was found between carbon tax policy, production efficiency progress, and emission efficiency progress, confirming advantage of the composite policy in terms of the environmental–economic benefits. In contrast to common stereotypes, the composite climate policy will promote the clean transformation of the energy structure and gross domestic product growth, and water scarcity in Shanxi Province will be alleviated under the energy–water nexus mechanism. Relying on complex cross-regional networks, China's economic inequality will be indirectly eased. The economic driving forces of the Yangtze River, Chengdu-Chongqing economic circles, and Shanxi Province will be strengthened, promoting system stability and sustainability. It is recommended that Shanxi Province implement a moderate carbon tax policy while improving production efficiency; the intensity of emissions technology reform can be flexibly adjusted according to actual needs. This study provides evidence to support the implementation of climate policy, which is of great significance for other similar regions looking to solve the dilemma of sustainable development.

Research on Evolutionary Game of Low-Carbon Logistics in Two-level Supply Chain under Carbon Tax Policy

Aiming at the problem of low carbon emission reduction in the sustainable development of the logistics industry, this study adopts the research method combining game theory and dynamic system analysis. A tripartite evolutionary game model including the logistics company, the manufacturer, and the government is constructed, and the strategy choice and mutual influence of each participant in the process of low-carbon emission reduction are discussed. At last, MATLAB software is used to simulate the model. By adjusting the values of different parameters, the process and results of the dynamic evolution of the system are displayed intuitively. It was found that the government's sound penalty and subsidy policy plays a key role in promoting the evolution of the manufacturer and the logistics company to adopt low-carbon strategies. Specifically, higher subsidies and moderate penalties can encourage enterprises to take low-carbon measures and promote the system's evolution to a low-carbon and stable equilibrium point. These conclusions help the logistics company and the manufacturer to identify the key factors and paths of low-carbon development, promote growth in the direction of low-carbon, green, and sustainable development, and provide theoretical support and empirical basis for the government to formulate and improve relevant policies on carbon emission reduction, and improve the effectiveness and pertinency of policies.

Could Africa leapfrog to a low-carbon future? Evidence on the nexus between environmental tax, foreign direct investment, resource dependence, and technological progress

The devastating impact of climate change has intensified discussions on balancing sustainable economic growth with environmental sustainability achievement. To contribute to the discourse, this study explores how environmental tax, foreign investment, natural resource (NRR), and technological innovation impact Sub-Saharan Africa's efforts towards a low-carbon future. Using data from 1995 to 2019 and advanced methodologies (Cross Sectional Augmented Autoregressive Distributed Lag, and Method of Moments Quantile Regression), the results showed that environmental taxes effectively minimize carbon emissions. FDI in the short run causes carbon emissions to rise slowly but causes a significant reduction in the long run. An increase in natural resources rent was found to cause damage to the environment significantly while technological innovation in the long run demonstrates a significant reduction in carbon emissions. The MMQR results confirm environmental tax significantly reduced CO2 emissions in all the quantiles. FDI and Technology in the long run cause a reduction in CO2 emissions while natural resource rent causes environmental destruction in all the quantiles. We recommend that policymakers introduce more carbon tax policies, establish sub-regional carbon offset markets, and prioritize the development of clean energy infrastructure.

Tracing embodied CO2 emissions and drivers in China’s financial industry under inter-provincial trade

With the establishment of “Dual Carbon” targets and industrial restructuring in China, the transition from the secondary industry to the tertiary industry has facilitated the rapid development of the financial sector. However, the significant CO2 emissions embodied within inter-provincial trade result in carbon leakage, posing challenges in assigning equitable carbon reduction responsibilities to the financial sectors across the 31 provinces of China. This study establishes a framework for evaluating CO2 emissions of financial sectors through 134 samples of 60 listed financial enterprises in the 31 provinces, tracking the embodied CO2 emissions within inter-provincial trade by using a multiregional input–output approach. The results reveal that the total CO2 emissions of the financial sector in China surged from 4.591 to 12.423 Tg CO2-eq between 2012 and 2020. The regions with the highest annual net CO2 emissions are Anhui (0.244 Tg), Zhejiang (0.242 Tg), and Henan (0.211 Tg). The key factors influencing net CO2 emissions are in the following order of importance: net CO2 density, per capita added value of service industry, the proportion of finances in service industries, and population size. Based on the findings, this study provides policy implications: reducing net carbon intensity, enacting tailored carbon tax policies based on embodied CO2 emissions, and fostering interdepartmental collaboration to address the impact of carbon leakage.

When differentiated carbon tax policy meets LBD of renewable energy and electrification of energy end-use: Policy implications of sectoral differentiation of carbon productivity and carbon emission

The impact of environmental policy stringency on energy efficiency innovation has been studied well without considering renewable energy storage and electrification to meet demand for energy structural transition in China. Based on these past studies, this paper introduces the CGE model to analyze carbon tax stringency via carbon productivity by accounting for the electrification and learning-by-doing effect of renewable energy. Through comparing the performance of the uniform and differentiated carbon tax, it is found that the differentiated carbon tax always has a worse environmental performance in reducing carbon emissions due to less energy efficiency improvement than uniform one. While uniform carbon tax at stricter level gains more economic and environmental benefits on sectoral and overall aspects in long term because of greater improvement on sectoral carbon productivity in energy-intensive industries. Furthermore, these findings at a large level reveal the intricate interaction among carbon tax, sectoral carbon productivity, renewables-related subsidy, electrification, and the learning-by-doing of renewables for accelerating the energy structural transition and simultaneously achieving the coordination between economic growth and environmental protection.

An Interval Fuzzy Programming Approach to Solve a Green Intermodal Routing Problem for Timber Transportation Under Uncertain Information

This study investigates an intermodal routing problem for transporting wood from a storage yard of the timber harvest area to a timber mill, in which the transfer nodes in the intermodal transportation network have multiple service time windows. To improve the environmental sustainability of timber transportation, a carbon tax policy is employed in the routing to reduce the carbon emissions. Uncertain information on the capacities and carbon emission factors of the transportation activities in the intermodal transportation network is modeled using interval fuzzy numbers to enhance the feasibility of the routing optimization in the actual timber transportation. Based on the above consideration, an interval fuzzy nonlinear optimization model is established to handle the specific routing problem. Model defuzzification and linearization are then conducted to obtain an equivalent formulation that is crisp and linear to make the global optimum solution attainable. A numerical experiment is conducted to verify the feasibility of the proposed model, and it reveals the influence of the optimization level and service time windows on the routing optimization, and it confirms that intermodal transportation is suitable for timber transportation. This experiment also analyzes the feasibility of a carbon tax policy in reducing the carbon emissions of timber transportation, and it finds that the performance of this policy is determined by the optimization level given by the timber mill and is not always feasible in all cases. For the case where a carbon tax policy is infeasible, this study proposes a bi-objective optimization that can use Pareto solutions to balance the economic and environmental objectives as an alternative. The bi-objective optimization further shows the relationship between lowering the transportation costs, reducing the carbon emissions, and enhancing the reliability on capacity and budget by improving the optimization level. The conclusions provide managerial insights that can help the timber mill and intermodal transportation operator organize cost-efficient, low-carbon, and reliable intermodal transportation for timber distribution, and support sustainable forest logistics.

Supply Chain Optimization Decisions for Environmentally Conscious Products with Preservation Investment and Carbon Tax Policy

Supply Chain Optimization Decisions for Environmentally Conscious Products with Preservation Investment and Carbon Tax Policy

The interrupted modern energy transition to LPG and the charcoal renaissance in urban Senegal

Fossil fuel subsidy removal may hinder access to clean fuels like LPG. Our analysis of urban Senegal shows that LPG use fell sharply after subsidies ended in 2009, despite later price drops. Households switched to charcoal, and the new availability of energy-efficient charcoal stoves made a return to LPG less appealing. This highlights how energy transitions among the poor are price sensitive, with implications for subsidy and carbon-tax policies.

Will fighting climate change affect commercial banks? A carbon tax policy simulation

Policies implemented to address climate change, especially carbon tax policies, have profound impacts on risk management and credit losses in the financial system. Existing research suggests that climate risks may lead to high‑carbon-emission companies facing asset stranding and credit downgrades; however, their specific effects on credit losses in the banking system have not been thoroughly elucidated. This study uses data from 21 listed Chinese commercial banks and 3163 firms for 2020, applying climate stress-testing to construct 16 carbon tax scenarios. These scenarios simulate the effects of a carbon tax on firms' asset values and financial stability and estimate the potential transmission of these effects to credit losses in Chinese commercial banks. Our findings reveal that introducing a carbon tax significantly increases bank credit losses, with credit losses escalating exponentially as tax rates increase. State-owned commercial banks experience the highest losses, followed by joint-stock and city banks. The primary contributors to these credit losses are high‑carbon industries such as electricity, manufacturing, and transportation. These findings underscore how carbon tax policies can decrease firms' asset values and thereby increase banks' credit risks, providing essential insights for policymakers designing climate policies.

Low-Carbon Water–Rail–Road Multimodal Routing Problem with Hard Time Windows for Time-Sensitive Goods Under Uncertainty: A Chance-Constrained Programming Approach

In this study, a low-carbon freight routing problem for time-sensitive goods is investigated in the context of water–rail–road multimodal transportation. To enhance the on-time transportation of time-sensitive goods, hard time windows are employed to regulate both pickup and delivery services at the start and end of their transportation. The uncertainty of both the demand for time-sensitive goods and the capacity of the transportation network are modeled using L-R triangular fuzzy numbers in the routing process to make the advanced routing more feasible in the actual transportation. Based on the carbon tax policy, a fuzzy linear optimization model is established to address the proposed problem, and an equivalent chance-constrained programming formulation is then obtained to make the solution to the problem attainable. A numerical experiment is carried out to verify the feasibility of incorporating the carbon tax policy, uncertainty, and water–rail–road multimodal transportation to optimize the low-carbon freight routing problem for time-sensitive goods. Furthermore, a multi-objective optimization is used to reveal that lowering the transportation costs, reducing the carbon emissions, and avoiding the risk are in conflict with each in the routing. We also analyze the sensitivity of the optimization results concerning the confidence level of the chance constraints and the uncertainty degree of the uncertain demand and capacity. Based on the numerical experiment, we draw several conclusions to help the shipper, receiver, and multimodal transportation operator to organize efficient water–rail–road multimodal transportation for time-sensitive goods.

Optimum low-carbon transformation pathways of China’s iron and steel industry towards carbon neutrality based on a dynamic CGE model

Low-carbon transformation pathways of the iron and steel industry play a significant role towards achieving the carbon neutrality target by 2060. This study explores the low-carbon transformation pathways of China’s iron and steel industry in 2060 under different emission reduction policy scenarios by adopting a modified dynamic computable general equilibrium model. We found that: (1) China’s crude steel production will peak in 2024–2026, with a value of approximately 10.49 × 102–11.11 × 102 Mt. (2) Four integrated policy scenarios (C1T1E2: carbon trading policy, carbon tax, and renewable energy policy; C1T6E2; C6T1E2; and C6T6E2) have the most potential to achieve the carbon neutrality target by 2060; their remaining CO2 emissions are 2.52 × 102, 1.99 × 102, 1.21 × 102 and 0.69 × 102 in 2060, respectively. (3) The projected CO2 emissions per ton steel from 2020 to 2060, of which the impact degree in the carbon trading market policy scenario shows the most difference, fluctuated from 0.81 t CO2/t under the C1 scenario to 0.42 t CO2/t under the C6 scenario in 2060. (4) The reduction degree of energy consumption per ton steel performed the best in the integrated policy scenarios, of which the integrated C6T6E2 scenario (82 kgce/t in 2060) had the most effect on energy consumption per ton steel, followed by C6T1E2 (101 kgce/t) and C1T6E2 (125 kgce/t).

Understanding the Inequality and Welfare Impacts of Carbon Tax Policies

Understanding the Inequality and Welfare Impacts of Carbon Tax Policies

Are air travelers willing to pay for mandatory carbon emission policies? Evidence from China

The aviation industry is one of the fastest-growing sectors in terms of CO2 emissions and also one of the most challenging to decarbonize. China has become the world's second-largest aviation market. While a nationwide mandatory carbon reduction policy has yet to be introduced in China's aviation sector, it may be implemented in the coming years. The implementation of mandatory carbon reduction policies will inevitably raise questions about the distribution of additional costs. Therefore, air travelers' willingness to pay (WTP) and the factors influencing it are critical considerations for policymakers and airlines. However, there is a lack of research on the WTP of Chinese air travelers under mandatory carbon reduction policies. No studies have specifically focused on the regional differences in WTP among air travelers in China. Moreover, existing research on air travelers' WTP for carbon offsets rarely captures the impact of rational, emotional, and social interaction factors. Therefore, this study investigates the WTP of 3424 air travelers across 31 provincial-level administrative regions in China within the context of a carbon tax policy. Using the Heckman two-step model, the study analyzes the impact of rational, emotional, and social interactions on air travelers' WTP. The results indicate that, after removing biased samples, the average WTP among Chinese air travelers is 311.04 CNY ($44.14) per ton of CO2. The highest WTP is observed in the East China region at 341.20 CNY ($48.42) per ton of CO2, while the lowest is in the Northeast region at 263.19 CNY ($37.35) per ton of CO2. Epistemic performance expectancy, social performance expectancy, function performance expectancy, and anticipated pride positively influence WTP. In contrast, effort expectancy negatively impacts WTP. Additionally, social interaction can moderate the effects of certain rational and emotional factors on WTP. It is noteworthy that although anticipated guilt does not directly influence WTP, its positive impact on WTP can be moderated through social interactions. The results of this study can assist governments in formulating effective carbon emission reduction policies for the aviation industry. Moreover, these findings can provide valuable insights for airlines to adjust pricing strategies under mandatory carbon reduction policies, thus holding practical significance.

Research on the Application of Conjoint Analysis in Carbon Tax Pricing for the Sustainable Development Process of China

This study aims to evaluate the preferences of Shanghai residents for four key attributes of carbon tax policies via the choice-based conjoint analysis method, with the goal of understanding the potential application of carbon tax policies in China. The findings indicate that the most critical concern for Shanghai residents is the annual cost of the ca trbonax (48.87%), followed by policy transparency (24.72%), revenue allocation (16.68%), and policy implementers (9.73%). The average willingness to pay is CNY 1435.28 annually, indicating a relatively high acceptance of carbon tax policies. Furthermore, increasing public awareness of carbon tax policies significantly enhances willingness to pay, which in turn helps increase tax revenue and promotes the development of low-carbon technologies. This study provides valuable insights for policymakers on carbon tax implementation, contributing to China’s transition to a low-carbon economy.

Decarbonization and waste reduction in a disrupted food supply chain: a step towards achieving food sustainability

PurposeThis study aims to reduce carbon emissions and minimize waste in the event of disruptions in a short and fast-food perishable such as fruits, vegetables, packaged food items, etc. supply chain through optimal investment in green and preservation technologies.Design/methodology/approach This study utilized a Hessian matrix approach to optimize decision variables with an objective to maximize the profit function.FindingsThe study demonstrates that investing in both green and preservation technology within a short and fast-food supply chain is highly beneficial for decarbonization and waste reduction and it leads to profit maximization. It has been shown with the help of a numerical experiments with investment in both green and preservation technology that total profit is 3.09% higher than without investment made in either technology.Practical implicationsThis study aids the industry in achieving food sustainability by minimizing waste of perishables and also minimizes carbon emissions which is essential for environmental protection. It assists industries in determining the optimal investment in preservation technology to minimize waste and in green technology to reduce emissions, thereby maximizing profits.Originality/valueThe current study formulates an inventory model that helps in decarbonization and waste reduction in food supply chain with the consideration of machine learning, demand disruption, preservation technology investment, screening of purchased items, waste disposal, a double triangular distribution deterioration rate, green technology investment, carbon emissions from various supply chain activities, carbon tax policy and fuel price variation over time for perishable food products in a two-warehouse system.

Impact of Carbon Tax on Renewable Energy Development and Environmental–Economic Synergies

Global warming caused by greenhouse gas emissions has become a worldwide environmental problem, posing a great threat to human survival. As the world’s largest emitter of carbon dioxide, China has pledged to reach peak carbon emissions by no later than 2030 and carbon neutrality by 2060. It is found that a carbon tax is a powerful incentive to reduce carbon emissions and promote an energy revolution, but it may have negative socio-economic impacts. Therefore, based on China’s 2020 input–output table, this paper systematically investigates the impacts of a carbon tax on China’s economy, carbon emissions, and energy by applying a computable general equilibrium model to determine the ideal equilibrium between socio-economic and environmental objectives. Based on energy use characteristics, we subdivided the energy sector into five major sectors: coal, oil, natural gas, thermal power generation, and clean power. The results show that when the carbon emission reduction target is less than 15%, that is, when the equilibrium carbon tax price is less than 54 yuan/ton, the implementation of a carbon tax policy can significantly reduce carbon emission and fossil fuel energy consumption, while only slightly reducing economic growth rate, and can achieve the double dividend of environment and economy. Moreover, because the reduction of coal consumption has the greatest impact on reducing carbon emissions, the ad valorem tax rate on coal after the carbon tax is imposed is the highest because coal has the highest carbon emission coefficient among fossil fuels. In addition, as an emerging clean energy source, hydrogen energy is the ideal energy storage medium for achieving clean power generation in power systems. If hydrogen energy can be vigorously developed, it is expected to greatly accelerate the deep decarbonization of power, industry, transportation, construction, and other fields.

A sustainable fuzzy economic production quantity model (SFEPQM) with sporadic machine failures, inspection and prepayments under carbon tax and cap policy

Goals for sustainability have caused an upcoming change in the emphasis of Economic Production Quantity models, which was previously limited mainly to financial considerations to include aspects of the environment as well. The primary tools used in many nations to reduce emissions are carbon cap and price legislation. However, companies in the production industry may have difficulties with their planning and oversight procedures as they frequently have to cope with faulty products and machinery failures. Previous research has not addressed the comprehensiveness of green investment in machine breakdowns. Considering this problem, we have developed a sustainable economic production quantity model with sporadic malfunctions of machinery and prepayments under carbon tax and cap regulations. Our aim is to minimise the overall cost of faulty items with the investment in green technologies. An approach that combines with the outstanding effectiveness of green strategies to minimise emissions will culminate in a greener production that generates more profit than the traditional system. This study considers two cases i.e. with and without green technology investment (GTI). It also has many predictions, including the execution of inspections afterwards as well as during manufacturing, faulty goods are scrapped while others are sold at discounted price.

Implementation of carbon tax policies to encourage the use of public transportation in cities

The use of public transport is one of the concepts of sustainable transport. However, people prefer to use private vehicles, which causes various problems, one of which is the high carbon emissions produced. This research aims to encourage programs to use passenger public transportation through a carbon tax. The method in this research is descriptive quantitative with primary data and secondary data. Secondary data was developed in the research by collecting literature study sources on the concept of sustainable transportation development as well as primary data carried out by analyzing calculations regarding the implementation of the carbon tax. There are several proposals that can significantly accelerate the achievement of goals, namely a collaborative approach through collaboration between local government agencies, a policy of progressively implementing a carbon tax as a coercive policy and supported by a program to provide supporting facilities for public transportation. Decision making in this research was carried out by looking at the percentage increase in public transportation use based on the application of a carbon tax or carbon tax.

Evaluating the carbon emission reduction in construction and demolition waste management in China

Construction and demolition waste reduction (C&DWR) is an important measure to protect the environment and promote sustainable development in the construction sector. The present policy in China remains a lack of emphasis on carbon tax and penalty for reducing construction waste. This paper proposes a construction and demolition waste (C&DW) management model to identify the waste reduction effects of various policies in China. It simulates the effects of single policies and combined policies on waste reduction and carbon emission by using the approach of integrating system dynamics and grey model theory. The results reveal that: (1) Penalties can effectively reduce the amount of illegal dump waste and carbon emissions from illegal dump waste, with an appropriate penalty value (in Chinese CNY) suggested as ∈160,320. (2) Subsidies can vastly increase the amount of waste recycled and a carbon tax can reduce carbon emissions; the recommended values are suggested as subsidies ∈30,45 and carbon tax ∈40,70. (3) Compared to other policies, the combined policy of penalty–waste disposal charging fee–subsidy–carbon tax (160, 60, 45, 70) achieves the greatest environmental benefits in terms of reducing waste and carbon emission. (4) Governments should improve waste minimization incentive policies and gradually introduce trials for a carbon tax policy, encourage the use of digital governance combined with blockchain technology to regulate C&DW. These findings provide valuable insights for policymakers to develop effective waste reduction strategies and promote sustainability through the implementation of C&DWR theories.

Waste-to-Ammonia: A sustainable pathway for energy transition

Ammonia, with its exceptional storage and transportation characteristics, emerges as a promising hydrogen carrier that can play a crucial role in this transition. This study investigates the techno-economic and environmental feasibility of utilizing produced water (PW), a waste product in oil and gas production, for ammonia production (AP). Accordingly, three distinct scenarios of utilizing the PW to produce ammonia are analyzed: i) fossil fuel-based (FF) AP without CO2 capture (gray), ii) FF-based AP with CO2 capture module (blue), and iii) a solar-thermal based AP (green). Results suggest that the blue system offers a compromise between environmental impact and economic feasibility, achieving a significant reduction in CO2 emissions of 0.605 kg CO2/kg NH3 compared with the 1.87 kg CO2/kg NH3, where gray, blue, and green AP are associated with the values of $435.63/tNH3, $480.41/tNH3, and $955.05/tNH3, respectively. Moreover, this study highlights the influence of carbon tax policy on the cost of the FF-based gray systems, while becoming unprofitable above $104.75/tCO2. Analysis of AP costs across shale formations reveals variations in product cost with salt concentrations, with the Bakken and Haynesville formations exhibiting the highest cost per ton of ammonia of $433 and $426/tNH3 for blue and gray systems, respectively. Notably, it is observed that the formations with high solar radiation and low salinity including Permian and Niobrara show potential for green ammonia with payback periods of 13 and 15 years, respectively. This can be used as reliable benchmark to propose a model for achieving sustainable society.