Impact of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibirum Model Report as inadecuate




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Carbon-based border tax adjustments (BTAs) have recently been proposed by someOECD countries to level the carbon playing field and target major emerging economies.This paper applies a multi-sector dynamic computable general equilibrium (CGE) modelto estimate the impacts of the BTAs implemented by US and EU on China’s sectoralcarbon emissions. The results indicate that BTAs will cut down export prices and transmitthe effects to the whole economy, reducing sectoral output-demands from both supplyside and demand side. On the supply side, sectors might substitute away from exportingtoward domestic market, increasing sectoral supply; while on the demand side, thedomestic income may be strikingly cut down due to the decrease in export price,decreasing sectoral demand. Furthermore, such shrinkage of demand may similarlyreduce energy prices, which leads to energy substitution effect and somewhat stimulatescarbon emissions. Depending on the relative strength of the output-demand effect andenergy substitution effect, sectoral carbon emissions and energy demands will varyacross sectors, with increasing, decreasing or moving in a different direction. Theseresults suggest that an incentive mechanism to encourage the widespread use ofenvironment-friendly fuels and technologies will be more effective.

Keywords: Border carbon tax adjustments ; Computable general equilibrium model ; Carbon emissions

Subject(s): Environmental Economics and Policy

Issue Date: 2012-02

Publication Type: Working or Discussion Paper

PURL Identifier: http://purl.umn.edu/249391

Total Pages: 50

JEL Codes: D58; F18; Q43; Q48; Q52; Q54; Q56; Q58

Record appears in: Australian National University > Centre for Climate Economics & Policy (CCEP) > Working Papers





Author: Bao, Qin ; Tang, Ling ; Zhang, ZhingXiang ; Qiao, Han ; Wang, Shouyang

Source: http://ageconsearch.umn.edu/record/249391?ln=en







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