Simulations for double dividend of carbon tax and improved energy efficiency in the transportation industry

The Chinese visional goal of achieving the carbon peak and carbon neutrality puts forward higher requirements for low-carbon development in the transportation industry. Seeking appropriate mitigation strategies to develop low-carbon transportation has been an important part of low-carbon economic development. This study develops a CGE model to analyze the impact of carbon-tax implementation on the transportation industry. It designs four carbon tax-recycling scenarios and simulates for double dividend of carbon tax policy. Then, it designs three scenarios including improved energy efficiency and a carbon tax to explore appropriate mitigation strategies combination. The carbon tax will reduce carbon emissions but it will also reduce sectoral outputs. However, carbon tax recycling can alleviate the negative impact on sectoral outputs, meanwhile achieving reducing carbon emissions. The energy rebound effect brought by improved energy efficiency will greatly reduce the carbon emissions reduction effect, but the carbon tax can promote the awareness of emission reduction of consumers and inhibit the energy rebound effect in the transportation industry. Therefore, at the same time of improved energy efficiency, carbon tax policies should be timely formulated to better promote the sustainable development of the varied transport sectors.

Automated summary

China's vision of achieving carbon peak and carbon neutrality has placed higher demands on low-carbon development in the transportation industry. Finding appropriate mitigation strategies for low-carbon transportation has become a crucial part of low-carbon economic development. This study uses a CGE model to analyze the impact of carbon tax implementation on the transportation industry. It explores different carbon tax-recycling scenarios and evaluates the potential double dividend effects of carbon tax policy. Additionally, it investigates the combination of improved energy efficiency and a carbon tax as suitable mitigation strategies. The study finds that while carbon tax leads to reduced carbon emissions, it also decreases sectoral outputs. However, carbon tax recycling can alleviate the negative impact on sectoral outputs, thus achieving both reduced carbon emissions and economic sustainability. Improved energy efficiency may result in an energy rebound effect that reduces the effectiveness of carbon emissions reduction. Yet, the implementation of a carbon tax can promote consumer awareness of emission reduction and reduce the energy rebound effect in the transportation industry. Hence, timely formulation of carbon tax policies alongside improvements in energy efficiency can better promote sustainable development in various transportation sectors.