The General Equilibrium Impacts of Carbon Tax Policy in China: A Multi-model Assessment

The purpose of this modeling exercise is to conduct a multi-model comparison of carbon tax policy in China to examine the potential impacts in both near-term 2020, medium-term 2030 and distant future 2050. Though Top-down CGE models have been applied frequently on climate or other environmental/energy policies to assess emission reduction, energy and economic wide general equilibrium outcomes in China, different models often vary greatly across models. In this paper, we examine and compare a range of Chinese CGE models with different characteristics, to look at a plausible range of carbon tax scenarios, examine and compare the model differences by focusing on a common set of carbon tax policies (low, medium and high carbon tax scenarios), with same socio-economic drivers such as population and labor input projections, GDP projections, foreign energy price shocks and etc. We found the overall impacts of carbon tax to achieve China’s 2030 NDC target is similarly on macro-level indicators across the selected China CGE models: low and medium tax pricing regime can help China reach its NDC target with limited negative impacts economic-widely. However, models differ substantially in terms of impacts on detail structure of GDP, price impacts, quantity impacts at sectoral level, as well as energy and carbon intensity reductions.