Impacts of Carbon Tax Policy on CO2 Mitigation and Economic Growth in China

In this paper we examine the impacts of carbon tax policy on CO2 mitigation effects and economic growth in China by using a dynamic energy-environment-economy computable general equilibrium (CGE) model. The results show that 30, 60, and 90 RMB per ton CO2 of carbon tax rate will lead to a reduction of CO2 emissions by 4.52%, 8.59%, and 12.26%, as well as a decline in the GDP by 0.11%, 0.25%, and 0.39% in 2020, respectively, if carbon tax revenues are collected by the government. Moreover, with energy efficiency improvements the CO2 emission per unit of GDP will equally drop by 34.79%, 37.49%, and 39.92% in 2020, respectively. Negative impacts on sectors and households will be alleviated if carbon tax revenues are returned to these sectors and households.