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A Chinese Sky Trust? Distributional Impacts of Carbon charges and Revenue Recycling in China

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  • James Boyce
  • Matthew Riddle
  • Mark D. Brenner
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    Abstract

    The introduction of carbon charges on the use of fossil fuels in China would have a progressive impact on income distribution. This outcome, which contrasts to the regressive distributional impact found in most studies of carbon charges in industrialized countries, is driven primarily by differences between urban and rural expenditure patterns. If carbon revenues were recycled on an equal per capita basis via a ‘sky trust,’ the progressive impact would be further enhanced: low-income (mainly rural) households would receive more in sky-trust dividends than they pay in carbon charges, and high-income (mainly urban) households would pay more than they receive in dividends. Thus a Chinese sky trust would contribute to both lower fossil fuel consumption and greater income equality.

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    Bibliographic Info

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp_brenner_riddle_boyce.

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    Date of creation: 2005
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    Handle: RePEc:uma:periwp:wp_brenner_riddle_boyce

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    Keywords: carbon charges; fossil fuels; China; income distribution; carbon revenues; fuel consumption; income equality;

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    Cited by:
    1. Viola Ferjentsik & Michael Ash, 2007. "An EU Sky Trust: Distributional Analysis for Hungary," Working Papers wp138, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. Tim Callan & Sean Lyons & Sue Scott & Richard S. J. Tol & Stefano Verde, 2008. "The Distributional Implications of a Carbon Tax in Ireland," Papers WP250, Economic and Social Research Institute (ESRI).

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