The Impacts of an Energy Price Decline Associated with a Carbon Tax on the Energy-Economy-Environment System in China

ABSTRACT

This article conducts a computable general equilibrium model to analyze the impact of energy price decline associated with a carbon tax policy in China. The findings show that the fossil energy price decline will significantly increase fossil energy demand and carbon emissions, while carbon tax can offset the impacts, which is an alternative policy to mitigate the carbon emissions. Since the carbon tax policy will lead to relatively small negative impacts on real GDP when fossil energy price is in decline, during which it is a good opportunity for China to introduce carbon tax policy.

KEYWORDS:

• Carbon tax
• computable general equilibrium model
• energy-economy-environment system
• energy price

Acknowledgments

The authors thank the anonymous referees and the editor (Prof. Ali Kutan) of this journal and participants in the 2018 International Conference on Energy Finance (ICEF 2018) for valuable comments and discussions.

Supplementary material

Supplemental data for this article can be accessed here.

Additional information

Funding

This work was supported by the National Social Science Fund of China under Grant No. [15ZDB165]