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Impacts of carbon pricing in reducing the carbon intensity of China's GDP

Author

Listed:
  • Cao,Jing
  • Ho,Mun-Sing
  • Timilsina,Govinda R.

Abstract

In contributing to global climate change mitigation efforts as agreed in Paris in 2015, China has set a target of reducing the carbon dioxide intensity of gross domestic product by 60-65 percent in 2030 compared with 2005 levels. Using a dynamic computable general equilibrium model of China, this study analyzes the economic and greenhouse gas impacts of meeting those targets through carbon pricing. The study finds that the trajectory of carbon prices to achieve the target depends on several factors, including how the carbon price changes over time and how carbon revenue is recycled to the economy. The study finds that carbon pricing that starts at a lower rate and gradually rises until it achieves the intensity target would be more efficient than a carbon price that remains constant over time. Using carbon revenue to cut existing distortionary taxes reduces the impact on the growth of gross domestic product relative to lump-sum redistribution. Recycling carbon revenue through subsidies to renewables and other low-carbon energy sources also can meet the targets, but the impact on the growth of gross domestic product is larger than with the other policies considered.

Suggested Citation

  • Cao,Jing & Ho,Mun-Sing & Timilsina,Govinda R., 2016. "Impacts of carbon pricing in reducing the carbon intensity of China's GDP," Policy Research Working Paper Series 7735, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7735
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    File URL: http://documents.worldbank.org/curated/en/784211467205076302/pdf/WPS7735.pdf
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    Cited by:

    1. agarwal, shekhar & Dutta, Madhurima & Dutta, Ritvik & Krishna, Vijesh, 2022. "Leveraging Artificial Intelligence in the Cyber Workplace: Prospects and Limitations for the Cyber Economy," Thesis Commons 4yr8j, Center for Open Science.
    2. Zhang, Xiaohan & Winchester, Niven & Zhang, Xiliang, 2017. "The future of coal in China," Energy Policy, Elsevier, vol. 110(C), pages 644-652.
    3. Wu, Qingyang & Tan, Chang & Wang, Daoping & Wu, Yongtao & Meng, Jing & Zheng, Heran, 2023. "How carbon emission prices accelerate net zero: Evidence from China's coal-fired power plants," Energy Policy, Elsevier, vol. 177(C).
    4. agarwal, shekhar & Gordon, Anna, 2022. "Complexities for the Indian Economy of China's Growing Technological Competence," OSF Preprints fk3r7, Center for Open Science.
    5. Huang, Xiaodan & Chang, Shiyan & Zheng, Dingqian & Zhang, Xiliang, 2020. "The role of BECCS in deep decarbonization of China's economy: A computable general equilibrium analysis," Energy Economics, Elsevier, vol. 92(C).

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