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ID: 107495

Analysis on the short-term sectoral competitiveness impact of c / Wang, Xin; Li, Ji Feng; Zhang, Ya Xiong

Wang, Xin	Journal Article
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2011.

Summary/Abstract

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 CO2) may necessitate compensatory measures to certain highly affected industries, and that a low tax rate (10 yuan/t CO2) would generate few competitiveness problems for all industries and may therefore be considered as an appropriate starting point.

Key Words

China ; Carbon Tax ; Sectoral Competitiveness

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ID: 136192

Economic impact of carbon pricing with regulated electricity prices in China: an application of a computable general equilibrium approach / Li, Ji Feng; Wang, Xin; Zhang, Ya Xiong; Kou, Qin

Wang, Xin	Article
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Summary/Abstract

We use a dynamic CGE model (SICGE) to assess the economic and climate impacts of emissions trading system (ETS) in China with a carbon price of 100 Yuan/ton CO2. A particular focus is given to the regulated electricity price regime, which is a major concern of electricity sector’s cost-effective participation in ETS in China. We found: (1) Carbon pricing is an effective policy for China to reduce CO2 emissions. Total CO2 emissions reduction ranges from 6.8% to 11.2% in short-term. (2) Rigid electricity price entails lower CO2 emissions reduction but can be considered as a feasible starting point to introduce carbon pricing policies in short-term as long as governmental subsidies are given to electricity production. (3) In mid- and long-term, the efficient policy is to earmark carbon revenue with competitive electricity price. We propose to use carbon revenue to reduce consumption tax in the first year of the introduction of carbon price and to use the carbon revenue to reduce production tax in following years.

Key Words

China ; CGE ; ETS ; Carbon Pricing ; Electricity price regulation

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