| Since 2011,China has begun to implement carbon emission trading pilots and aimed to establish a nationwide emission trading scheme(ETS)gradually to achieve the cost-effective carbon reduction.ETS could increase the production cost of regional key sectors,and thus have significant impacts on regional industrial competitiveness.In the process of regional ETS to national ETS,regional industrial competitiveness may be influenced by different types of carbon linkage and the related policy design.Moreover,the impacts of ETS on regional emission reduction would be distorted by existing energy policies in China because of the overlapping market coverage,and thus involving the change in industrial competitiveness.Therefore,this study takes BeijingTianjin-Hebei(BTH)region in China,where regional economic relationship are close and two ETS pilots existed,as the research area,to explore the impacts of different types of carbon linkage on the regional economy and industrial competitiveness,based on the constructed 2012 multi-regional static computable general equilibrium model.This study also simulates the effects of different ways of revenue recycling from carbon permits’ auction and regional allocation criteria of emission reduction on the regional economy and industrial competitiveness.Considering that carbon price signal in ETS may be distorted by energy pricing policies,and energy sectors and power sector generally have higher carbon emissions,this study investigates the interaction between ETS and two existing energy policies in China,i.e.,resource tax on energy resources and electricity price regulation,which have direct impacts on energy price.The results of this study indicate that carbon linkage effectively mitigates the adverse impacts of ETS on the regional economy and industrial competitiveness across the entire BTH region,but may lead to regional development imbalances.In the context of non-linked regional ETS,to meet the regional emission reduction targets for the 13th Five-Year Plan(FYP),Beijing,Tianjin,and Hebei all suffer losses in regional GDP and social welfare,compared to that in Business-as-Usual(BAU)scenario,which has no climate policies constraint.At the sector level,energy production sectors in Beijing and Tianjin,such as coal and natural gas production,suffer most losses in industrial competitiveness,measured by sectoral output,export,and inter-regional outflow.Owing to the energy-intensive industrial structure,energy sectors and many other sectors with higher emission intensity in Hebei bear much higher losses in industrial competitiveness than those in Beijing and Tianjin.Renewable energy sectors and service industries can benefit from the operation of regional carbon markets.Compared to that in the non-linked regional ETS,across the entire BTH region,the GDP losses in the BTH regional linkage and national linkage are 5.08%and 19.60%lower,respectively,and the welfare losses are 5.31%and 20.69%lower,respectively.Furthermore,under the BTH regional linkage scenario,losses in industrial competitiveness in Beijing and Tianjin decrease,while losses in industrial competitiveness in Hebei further increase,leading to the regional development imbalances.Well-designed revenue recycling from carbon permits auction and regional allocation criteria of emission reduction can significantly reduce the negative impacts of ETS on the regional economy and industrial competitiveness.Compared with the use of revenue from permits auction as regional government income,using revenue as lump-sum transfers to households or firms’ indirect taxes deduction can reduce the GDP losses in entire BTH region by over 14%and 60%,under the regional linkage and national linkage,respectively.Revenue recycling can also reduce the losses in industrial competitiveness in most sectors.In particular,using the revenue to deduct firms’indirect taxes can make the losses in industrial competitiveness in Hebei significantly decrease.Results also indicate that the allocation of regional emission reduction targets based on regional population or welfare in base-year increase GDP in the entire BTH region by 0.16-0.72%and 0.54-0.71%compared to those in BAU.Moreover,the above-mentioned two allocation criteria can reduce the losses in industrial competitiveness across the entire BTH region,but may significantly increase the negative impacts on industrial competitiveness in Beijing,compared to the case where regional emission reduction targets are achieved as the 13th FYP requested.Resource tax and electricity price regulation further exacerbate losses in the regional economy and industrial competitiveness.Compared to the non-linked regional ETS scenario without resource tax,a 6%ad valorem levy on coal,crude oil,and natural gas would make GDP losses in Beijing,Tianjin and Hebei increase by about 22.70%,25.43%,and 31.00%,respectively,and let welfare losses in Beijing,Tianjin,and Hebei raise by about 7.78%,3.66%,and 2.68%,respectively.Under the regional linkage and national linkage scenario with an energy tax,regional GDP and welfare losses in Beijing and Tianjin would decrease,while GDP and welfare losses in Hebei would further increase.Moreover,the interaction of energy tax and ETS can reduce losses in the industrial competitiveness of energy production sectors,while increasing the losses in the industrial competitiveness of other sectors.Results also indicate that the mix between electricity price regulation and ETS increase GDP losses in Beijing,Tianjin,and Hebei by about 11.72%,12.91%,and 11.45%,respectively,and raise welfare losses in Beijing,Tianjin,and Hebei by about3.41%,4.88%,and 1.21%,under the non-linked regional ETS scenario,respectively.These negative effects caused by electricity price regulation can be partially offset by carbon linkage.Moreover,electricity price regulation decrease industrial competitiveness losses in energy sectors and power sectors but have the opposite effects on other sectors.In the light of the above findings,this study proposes some policy implications from four aspects.First,the government should facilitate regional carbon linkage to achieve the cost-effective emission reduction.Second,the coordinated development between regions should be guaranteed by well-designed ancillary policies in the process of carbon linkage.Third,the regional industrial transformation and upgrading should be accelerated by carbon linkage.Finally,the policy interactions of ETS and energy and climate policies should be paid much more attention when designing and optimizing climate policy packages. |
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