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Title:Impacts of border carbon adjustments on China's sectoral emissions: Simulations with a dynamic computable general equilibrium model PDF Logo
Authors:Bao, Qin
Tang, Ling
Zhang, ZhongXiang
Qiao, Han
Wang, Shouyang
Issue Date:2011
Series/Report no.:Nota di lavoro, Fondazione Eni Enrico Mattei: Climate Change and Sustainable Development 93.2011
Abstract:Carbon-based border tax adjustments (BTAs) have recently been proposed by some OECD countries to level the carbon playing field and target major emerging economies. This paper applies a multi-sector dynamic computable general equilibrium (CGE) model to estimate the impacts of the BTAs implemented by US and EU on China's sectoral carbon emissions. The results indicate that BTAs will cut down export prices and transmit the effects to the whole economy, reducing sectoral output-demands from both supply side and demand side. On the supply side, sectors might substitute away from exporting toward domestic market, increasing sectoral supply; while on the demand side, the domestic income may be strikingly cut down due to the decrease in export price, decreasing sectoral demand. Furthermore, such shrinkage of demand may similarly reduce energy prices, which leads to energy substitution effect and somewhat stimulates carbon emissions. Depending on the relative strength of the output-demand effect and energy substitution effect, sectoral carbon emissions and energy demands will vary across sectors, with increasing, decreasing or moving in a different direction. These results suggest that an incentive mechanism to encourage the widespread use of environment-friendly fuels and technologies will be more effective.
Subjects:Border Carbon Tax Adjustments
Computable General Equilibrium Model
Carbon Emissions
JEL:D58
F18
Q43
Q48
Q52
Q54
Q56
Q58
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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