Low-Carbon Policies:a Comparison Of Carbon Tariff And Carbon Tax

Facing the double pressure of environmental problems in China and carbon tariff imposing, China must take some measures to reduce emissions, to achieve the goal of low-carbon economy, In this paper, we want to study China actively taking carbon tax or China passively accepting USA carbon tariff that had any different effects on Chinese GDP, citizens’ welfare and exports. Answering the question if China actively taking carbon tax being a good countermeasure of USA carbon tariff. The first chapter has carried on the summary to the carbon tax and carbon tariff concepts, present situation and existing research. By introducing a partial equilibrium model, we expounded the mechanism of carbon tax and carbon tariffs on exports and welfare. Two policies would both have negative effects on the exporting country’s exports and carbon tariff certainly would reduce exporting country’s welfare, but whether taking carbon tax would reduce exporting country’s welfare was uncertain. Considering USA taking carbon tariff requires its own emission reduction measures and the no double taxation in WTO policy, the paper sets three policy scenarios, which comprise of the US levying domestic carbon tax, the US levying domestic carbon tax and carbon tariffs of imported products from China and the differentiated carbon tax policy implemented in China and the USA. The GTAP-E research results show that China should choose carbon tariffs its effect on reducing Chinese GDP, citizens’ welfare is very limited compared with carbon tax. However, the indicators of export illustrate the action that China actively take carbon tax is superior to the behavior of America imposing carbon tariff on China. Two polices all are benefit for the green industry because they increase the export volume of green industry, while two polices have negative effects on intensive high-carbon industry such as chemical industry, metal smelting and rolling processing industry, and nonmetal mineral products, the exports of these industry will decrease.