Impacts of Carbon Pricing in Reducing the Carbon Intensity of China's GDP
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 co...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/06/26537193/impacts-carbon-pricing-reducing-carbon-intensity-chinas-gdp http://hdl.handle.net/10986/24652 |
| Summary: | 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. |
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