The influence of carbon tax on the ecological efficiency of China's energy intensive industries-A inter-fuel and inter-factor substitution perspective

China's energy intensive industries have posed great challenges in achieving carbon emissions reduction goals. We calculate the influence of carbon tax levying on the CO2 emissions as well as ecological efficiency of China's energy intensive industries utilizing inter-fuel and inter-factor substitution channel. To allow for the slow adjustment process of the enterprises of different fuels and factors inputs, a dynamic model and three-stage estimation procedure are used. Based on the substitution among fuels and factors, the results indicate that carbon tax levying will make the enterprises transform from consuming coal (with a higher carbon efficient) to lower oil/gas and electricity, and from inputting energy to inputting more labor and capital. Therefore, carbon tax is conductive for the CO2 reduction in China's energy intensive industries. With regard to the two kinds of ecological efficiency, carbon tax plays a negative role in improving them. Thus, carbon tax levy is suggested to reduce the carbon dioxide emissions in China's energy intensive industries. The future assessment tasks should include the ecological efficiency in to make the assessment more reasonable.