Effects of Carbon Tax on Urban Carbon Emission Reduction: Evidence in China Environmental Governance

Aiwen Zhao; Xiaoqian Song; Jiajie Li; Qingchun Yuan; Yingshun Pei; Ruilin Li; Michael Hitch

doi:10.3390/ijerph20032289

Effects of Carbon Tax on Urban Carbon Emission Reduction: Evidence in China Environmental Governance

Int J Environ Res Public Health. 2023 Jan 27;20(3):2289. doi: 10.3390/ijerph20032289.

Authors

Aiwen Zhao¹, Xiaoqian Song^{2

3}, Jiajie Li⁴, Qingchun Yuan⁵, Yingshun Pei¹, Ruilin Li⁶, Michael Hitch⁷

Affiliations

¹ College of Finance, Institute of High-Quality Development in Huaihai Economic Zone, Xuzhou University of Technology, Xuzhou 221018, China.
² China Institute of Urban Governance, Shanghai Jiao Tong University, Shanghai 200030, China.
³ School of International and Public Affairs, Shanghai Jiao Tong University, Shanghai 200030, China.
⁴ Key Laboratory of Ministry of Education for Efficient Mining and Safety of Metal Mines, School of Civil and Resource Engineering, University of Science and Technology Beijing, Beijing 100083, China.
⁵ School of Foreign Languages, Xuzhou University of Technology, Xuzhou 221018, China.
⁶ School of Political Science and Economics, Yonsei University, Seoul 03722, Republic of Korea.
⁷ Western Australian School of Mines: Minerals, Energy and Chemical Engineering, Curtin University, Perth, WA 6845, Australia.

Abstract

Carbon tax is an important economic instrument in achieving the goal of carbon emission reduction and sustainable development. This paper investigates the effects of carbon tax on carbon emission reduction in China. First, a non-competitive input-output table for Carbon Emissions of 28 sectors in China after Carbon Tax was established, based on the "2018 China Non-competitive Input-Output Table (42 Sectors)" and the carbon emission data of sectors provided by China Carbon Emission Accounts and Datasets (CEADs). Then, an input-output price model was established to study the changes on product price, GDP, employment, and carbon dioxide emissions of 28 sectors after carbon taxing ranged from 10 to 200. When the carbon tax rate reaches 200 yuan/ton, the inflation rate will be 5.907%, the total GDP will be decreased to 1.910%, the total labor force will be decreased to 1.744%, and the total carbon emission reduction rate will be increased to 8.171%. Results showed that with the increases in carbon tax, the inflation rate was increased, the rate of carbon emission reduction was increased, and the negative effects on GDP and employment were also increased. Suggestions on policy making, such as combination of carbon taxing and carbon trading, dynamic adjustment mechanism, tax neutrality, and forcing active carbon reduction, were proposed to minimize the adverse effect of levying carbon tax. The results from this paper would provide a reference for the policy making on carbon management.

Keywords: carbon emission reduction; carbon peak and carbon neutralization; carbon tax; effect measurement; macroeconomy.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Carbon Dioxide / analysis
China
Conservation of Natural Resources*
Economic Development
Environmental Policy*
Taxes

Substances

Carbon Dioxide

Grants and funding

This research was funded by the Natural Science Foundation of China. grant number 72004130, 52004021, Hebei Provincial Key Research Projects, grant number 22373706D, Fundamental Research Funds for the Central Universities and the Youth Teacher International Exchange and Growth Program, grant number QNXM20220003 and 111 Project, grant number B20041.