CGE model-based analysis of the neutralized hybrid carbon policy and its decomposed effects on economic growth,carbon reduction,and energy utilization costs

The hybrid policy is a flexible policy tool that combines features of carbon trading and carbon taxation.Its economic and environmental effects under China's background are still not studied in detail.Given the exogenous carbon reduction targets,carbon prices,and carbon tax-rates,by computable general equilibrium modeling methods and factor decomposition methods,this article investigates direct and cascaded effects of the hybrid policy on economic growth,energy utilization,and carbon emission on the national level and the sector level,with China's national input-output data-set.Stepwisely,policy scenarios with irrational estimated results are selectively excluded based on comprehensive evaluation among economic,carbon reduction and other policy targets.As a result,against national economic conditions in 2007,the hybrid policy,with a carbon reduction target of -10%,a carbon tax-rate of around $10,and a ceiling carbon price of $40,is highly recommended,because of its significant lower economic loss,lower energy utilization cost,and practical robustness against fluctuation of energy market and carbon market.Furthermore,by decomposition analysis,carbon reduction-related costs are decomposed into a direct part that includes carbon allowance price and carbon tax,and an indirect part as the energy price incremental induced by direct carbon costs.Gross carbon reduction may be decomposed into three parts such as energy intensity,economic scale,and technical progress.And,carbon taxation is the main policy tool that stimulates to improve the energy efficiency.

Effect analysis of carbon trading on Economy-Energy-Environment system and calculation of reasonable carbon price intervals

This paper constructs a 4-lier computable general equilibrium model which includes such modules as modeling carbon emission constraints and carbon trading(CT),and incorporates the cost of carbon emissions into constant elasticity of substitute production function.Under scenario settings under different carbon abatement targets,based on 2007 national social accounting matrix and related statistical data about energy consumption and carbon emission,effects on economic outputs,energy consumption,and carbon abatement are estimated and analyzed at both macro and sector level.By calculating selected novel indicators that compromise between macroeconomic opportunity cost and achievable carbon abatement,reasonable carbon price intervals are given for enhancing the robustness and liquidity of carbon market.Further,by decomposition and share-weighted methods,expected carbon abatement and energy price are measured and analyzed in details.Some results are meaningful for fundamental design of the future carbon market.Given constant energy utilization and carbon abatement technologies at the macro level,the higher the carbon price the more actual carbon abatement;the more gross domestic product loss,the less energy consumption.Accwding to the overall situation estimated for 2007 in China,the advice given is to introduce a carbon abatement target rate(R_c)of-10%,which is helpful to make carbon market stable against unexpected carbon price shocks between[6.9,35]/tC with less economic loss.According to Kaya decomposition,after introduction of carbon pricing,carbon abatement is mainly contributed by the effects of energy intensity(EI)and technical progress.Further,CT may help reduce energy consumption and induce transformation to a low-carbon energy structure.At the sector level,the introduction of CT could induce economic recession in all sectors,especially energy.However,the overall economic structure remains unchanged to some extent.CT will help reduce energy consumption in all sectors,especially energy.Overall utilization costs of the energy composite can be divided in two,market price and carbonrelated costs.Carbon-related costs mainly contribute to variation in the utilization cos of the energy composite;carbon pricing may help non-energy sectors achieve sufficient carbon abatement by pushing up energy utilization cost.However,despite achievable carbon abatement by the energy sector being relatively high,induced by carbon pricing,there is still significant potential for other incentive policies to stimulate further abatement,such as energy resources taxation and transportation fuel taxation,especially in the sectors of coal and transportation.Finally,some advice is proposed in regard to policy decisions and further research.