The Optimization Designs To Improve The Performance Of China’s Carbon Taxes

The greenhouse gas generated from the fossil energy closely related with the climatic change. Currently, China is the largest energy consumer and carbon emitter in the world, in addition, its consumption structure of energy relies mainly on coal. As the low-carbon becomes more globalized, China is facing with the pressure of energy conservation and emission reduction from the international community. The Chinese government committed to reducing carbon intensity and promoting non-fossil energy. Carbon taxes as an effective means of energy conservation and emission reduction is important for China’s economy to realize the low-carbon transition. But, the carbon taxes reform is still in the stage of planning rather than coming into effect. In the meantime, as China is the large trade country in the world, decision makers should take cross-border effect into consider when establish carbon taxes reform.Against such background, this paper develops a new multi-country general equilibrium model with trade interactions and detailed energy disaggregation. From perspectives of fossil energy types and sector coverage, we change the levy object of carbon taxes and design six scenarios to evaluate the performance of different designs from the aspects as product output, carbon dioxide emission, trade and analyze the reasons.In addition, we set carbon taxes efficiency evaluation indexes to compare the cost efficiency and reduction efficiency synthentically. By means of sensitivity analysis, this paper analyzes the values of parameters in the model to explore the potential factors influencing the simulation results. Finally, combining the other policies, such as tax revenue recycling policy and low-carbon energy subsidies, we compare the performance between the carbon taxes alone and complicated policy mixes to seek the optimized design suitable for China.The main findings are as follows. Firstly, China’s implementation of carbon taxes would lead to cross-border externalities through trade channel which bringing competitiveness problems and energy channel which bringing energy rebound effect. They generate the economic losses and carbon leakage hindering the realization of carbon emission reduction target. Secondly, different designs of carbon taxes will inducing the discrepancy of performance, so the setting of carbon taxes object is the important factors for government to choose the more suitable designs according to China’s national condition actually. Thirdly, the sensitivity analysis shows that some values of parameters in the model can change the simulated results within certain limits, such as the carbon intensity target setting, Armington trade elasticity and energy supply elasticity. Fourthly, combining with the tax revenue recycling policy and low-carbon energy subsidies on the basis of the carbon taxes can improve the efficiency of carbon taxes. As a result, low-carbon energy consumption ratio will increase with the rise of subsidy rate, and there is no strong type "double dividend" phenomenon of the revenue recycling policy. Looking ahead, the Chinese government should develop well-designed carbon taxes reforms to improve the performance considering the factors in this paper.