Science of the Total Environment 762 (2021) 143093

Contents lists available at ScienceDirect

Science of the Total Environment

journal homepage: www.elsevier.com/locate/scitotenv

Impact of energy structure on carbon emission and economy of China in

the scenario of carbon taxation
Jia Liu a, Jinyu Bai a, Yi Deng a, Xiaohong Chen b, Xiang Liu c,⁎
a
School of Information and Safety Engineering, Zhongnan University of Economics and Law, Wuhan 430073, China
b
School of Business, Central South University, Changsha 410083, China
c
School of Business Administration, Guangdong University of Finance, Guangzhou 510521, China

H I G H L I G H T S G R A P H I C A L A B S T R A C T

• This research proposes a carbon taxa-

tion evaluation model based on the en-
ergy substitution theory and input-
output theory.
• The effect of carbon taxation is evalu-
ated by carbon reduction, economic im-
pact, and reduction cost.
• A moderate tax rate can help achieve
the target of carbon emission reduction
with the minimum economic cost.

a r t i c l e i n f o a b s t r a c t

Article history: As the largest CO2 emitter in the world, China intends to achieve the peak of carbon emissions in around 2030.
Received 27 July 2020 Unlike many other countries' targets of reducing the amount the carbon emissions, China has engaged in achiev-
Received in revised form 29 September 2020 ing the goal of carbon emission intensity regulation including economic development and carbon emission re-
Accepted 11 October 2020
duction. In recent years, carbon tax policy has been implemented by about 30 national and sub-national
Available online 16 October 2020
jurisdictions in controlling carbon emissions and has shown promising results. In this context, this research eval-
Editor: Martin Drews uates whether the carbon tax is an effective way for China to accomplish the win-win target of carbon reduction
and GDP growth. Specifically, a model is established based on the energy substitution theory and input-output
Keywords: theory to evaluate the effectiveness of carbon tax on the eight economic sectors of China. The carbon emission
Carbon tax reduction and economic performance before and after carbon taxation are compared. Moreover, the effects of dif-
Carbon emission ferent carbon tax rates on economic development are analyzed. The results are as follows: (1) The total amount of
Energy substitution theory carbon emission decreases while the carbon tax is levied, and a positive correlation is found between the tax rate
Scenario analysis and the emission reduction amount. (2) The carbon tax has a significant impact on economic development, and a
negative correlation is found between the tax rate and economic development. However, the loss of the economic
output caused by the carbon tax gradually reduces over time. (3) Carbon tax policy would be effective for China to
accomplish the win-win goal of carbon reduction and GDP growth. Moreover, the carbon tax rate should be set at
a low level to achieve the target by the lowest economic cost. On this basis, several policy recommendations are
proposed by this research.
© 2020 Elsevier B.V. All rights reserved.

⁎ Corresponding author.
E-mail address: liuxiang@gduf.edu.cn (X. Liu).

https://doi.org/10.1016/j.scitotenv.2020.143093
0048-9697/© 2020 Elsevier B.V. All rights reserved.
J. Liu, J. Bai, Y. Deng et al.
1. Introduction
The Intergovernmental Panel on Climate Change (IPCC) has identi-
fied one of the main causes of global warming is the increase in CO2
emissions, which are mainly released when the fuel is burned for pro-
duction. Excessive CO2 emissions exert an enormous negative influence
on the environment and affect sustainable economic development,
which is harmful to nature and human beings. Both environmentalists
and economists agree that imposing a price on CO2 emissions is a
cost-effective regulatory approach to reducing those emissions. Pricing
the CO2 emissions stimulates the emitters with low emission costs to re-
duce the emission.
Carbon tax and carbon emission trading systems (ETS) are the com-
monly used carbon pricing policy instruments by various countries to
promote carbon reductions, which are conducive to establish a huge
carbon market (Erik Haites, 2018). The global financial market data
and infrastructure provider Refinitiv report that the total value of the
global carbon market increased by 34% in 2019, reaching 214.5 billion
US dollars which have increased nearly fivefold since 2017 (Refinitiv,
2020). According to the World Bank, there are now 61 carbon pricing
initiatives in place or scheduled for implementation, consisting of 31
ETSs and 30 carbon taxes, covering about 22% of global greenhouse
gas emissions (World Bank, 2020). More than 15 countries also have
both a tax and an ETS, including Japan, France, Canada, etc. Particularly,
the carbon tax policies in Canada and Japan cover 70% and 68% of the
total CO2 emissions in 2018, respectively. At present, the carbon dioxide
emission reduction targets of most countries are different. The main
reason is that the countries are at different stages of development, and
carbon emissions vary widely among them. Accordingly, many coun-
tries choose carbon tax, ETS, or a mixed policy for carbon reductions.
China is the largest CO2 emitter in the world, which makes a com-
mitment of it to the world to achieve a 60–65% decrease in CO2 emis-
sions per GDP in 2030 compared with that in 2005. Unlike many other
countries' one single target of reducing carbon emissions, China has en-
gaged in achieving the goal of carbon emission intensity regulation in-
cluding economic development and carbon emission reduction.
Moreover, China intends to achieve the peak of carbon emissions in
around 2030. Therefore, in recent years, the Chinese government has
shown its strong determination in conserving energy and mitigating
emissions by establishing a series of regulations and policies. Since
2013, China has successfully carried out a regional carbon emission
trading pilot in seven regions, while the national carbon emission trad-
ing system was officially launched in 2017. The seven pilot schemes
cover in total 20% of the energy use and 16% of the CO2 emissions of
China. However, due to price signals and quota allocation, the actual
role and effect of the carbon emission trading system of China have
been controversial (Haites, 2018).
In recent years, with increasingly more recognition of the carbon tax
of various countries, it is necessary to evaluate whether the carbon tax is
an effective approach for China to accomplish the win-win targets of
carbon reductions and GDP growth. In fact, many governmental re-
search institutes have proposed that the country should implement
the policy of carbon tax to develop a low carbon economy. Chinese
Academy of Fiscal Science which is affiliated to the Ministry of Finance
of China has carried out a preliminary study on the roadmap of carbon
tax implementation of China (CRIFS, 2009). Moreover, the Energy Re-
search Institute in the National Development and Reform Commission
of China proposed that the country should implement a carbon tax to
promote carbon abatement (Energy Research Institute, 2010). These
proposals have been carefully considered by the government (Liu
et al., 2014). In this research, we establish a model based on the energy
substitution theory and input-output theory to evaluate the effective-
ness of carbon tax on the eight economic sectors of China and compare
the carbon emission reduction and economic performance before and
after carbon taxation. Therefore, whether the carbon tax is an effective
way for China to accomplish the win-win target of carbon reduction
2
Science of the Total Environment 762 (2021) 143093
and GDP growth can be evaluated. On this basis, the paper analyses
the implementation of the carbon tax in China, both in terms of GDP
growth and carbon emission reductions.
2. Literature review
Carbon tax policy is the specific application of environmental tax
based on Pigouvian Taxes in the field of CO2 emission reduction. There
is a vast and growing literature on the effects of the carbon tax. Many
studies show that carbon tax policy can promote significant CO2 emis-
sion reductions (Floros and Vlachou, 2005; Bruvoll and Larsen, 2004).
Tietenberg (2013) analyzed various issues related to carbon tax includ-
ing the design of policy instruments and their impacts on economics,
CO2 emissions, renewable energy, technological diffusion, etc. Brian
and Nicholas (2015) summarized and evaluated the implementation
of the carbon tax in the province of British Columbia (BC) in Canada
which is the first area to implement the carbon tax in North America.
Their research shows that since the implementation of the carbon tax
in 2008, the carbon emissions of BC Province have been reduced by
5%–15%. Meanwhile, the carbon tax has no significant impact on the ag-
gregate economy. Burtraw et al. (2003) found that in addition to reduc-
ing CO2 emissions, carbon tax policies would reduce other negative
externalities related to carbon emissions. Orlov et al. (2013) analyzed
the impact of the carbon tax on Russia and indicated that the effective
implementation of the carbon tax system would promote the reduction
of carbon emissions and the improvement of the social wealth effect.
Andersson (2019) found that after the implementation of the carbon
tax, Swedish has reduced transport emissions by 6%. Metcalf (2019)
summarized the literature that focuses on the tax's impact on emissions
and found that the policy instrument of carbon taxation can effectively
promote emission reductions and the effect is closely related to the en-
ergy structure and the industrial structure of different countries.
There are numerous works about the effects of the carbon tax on
economic output. Godal and Holtsmark (2001) pointed out that the
tax system of Norway for carbon tax relief of the agriculture and pro-
cessing industry is correct. Otherwise, the profitability of the Norwegian
processing industry should be reduced by about 20%. However, Bruvoll
and Larsen (2004) stated that lower energy intensity and energy mix
variation cause a 14% reduction of CO2 emission in Norway while carbon
taxation contributes only 2%. Lee et al. (2007) proposed that the carbon
tax is an effective way to reduce carbon dioxide emissions, but the im-
plementation of a comprehensive carbon tax on all industries in a coun-
try is unfair or ineffective. Their analysis of the petrochemical industry
of Taiwan shows that the upstream industry can significantly reduce
carbon dioxide emissions, while the downstream industry cannot
achieve the established emission reduction goals. Lee et al. (2008) and
Meng et al. (2013) also pointed out that carbon tax has a negative im-
pact on GDP. On contrary, Wiseman and Dellink (2007) believe that
the carbon tax has a relatively small impact on GDP in the condition of
reasonable policy design based on the in-depth study of the case of
Ireland.
As a country with the largest annual carbon emission, the carbon
emission reduction strategy of China has always been a research
hotspot. Therefore, the carbon emission reduction effect of the carbon
tax policy and its possible impact on economic development is also
one of the key areas that have received much attention. Zhou et al.
(2018) investigated the effect of the carbon tax on transportation in
China. The results suggested that carbon tax rates for airlines, railway,
urban transport, and water transport should the same (50 RMB/ton-
CO2), while the appropriate carbon tax rate for the road transport sector
should be larger (60 RMB/ton-CO2). Zheng et al. (2017) developed a
two-stage game model to simulate the aviation carbon tax effect. The
research conducted by Li and Jia (2017) shows that CO2 emission in
China in 2030 will be reduced by 10–13% in the context of carbon taxa-
tion. Li et al. (2019) introduced a mixed policy instrument which com-
bines the industrial upgrades, carbon tax, and carbon trading to analyze
J. Liu, J. Bai, Y. Deng et al.
the effect of the carbon tax on the iron and steel industry. Chen (2013)
found that the carbon tax would harm the output of various industries
in the short term, but it would have a positive impact on them in the
long term. Sun and Kuang (2015) investigated the direct and cascading
effects of the hybrid policy which combines carbon trading and carbon
taxation on economic growth, energy utilization, and carbon emission
on the national level and sector level.
Economic structure, regional differences, and tax rate design are the
key factors determining the effect of carbon tax policy (Metcalf, 2019;
Tietenberg, 2013). Mian et al. (2014) considered the effect of alternative
factors of production and energy on the carbon tax. They found that the
total carbon emissions of China in 2020 would be reduced by nearly 3%
from 2010 while the carbon tax rate is set at 50 RMB /ton-CO2. Fang et al.
(2013) analyzed the impact of the carbon tax on the energy intensity
and economic growth of China. The empirical analysis of China shows
that the higher the rate of the carbon tax, the better the energy intensity
would be controlled. The earlier the carbon tax policy is launched, the
more obvious the carbon emission and energy intensity would be re-
duced. Based on the input-output table of 2010, Guo et al. (2014) di-
vided the energy sector into eight sectors according to the energy
consumption characteristics of different sectors. The research shows
that the moderate level of the carbon tax rate should significantly re-
duce carbon emissions and fossil energy consumption and have a slight
impact on the speed of economic growth. From the perspective of en-
ergy structure, reducing coal consumption is the most effective way to
reduce carbon emissions.
Liu et al. (2014) analyzed the impact of carbon taxation on the steel
industry of China and compared the emission reduction effects of the
carbon tax and compulsory emission reduction. Zhang et al. (2019) in-
dicated that reducing the production tax and increasing the carbon tax
would most probably benefit the developed provinces, such as Beijing,
Shanghai, Zhejiang, and Jiangsu. Afterward, recycling tax revenues to
low-income households should benefit the less-developed provinces.
Take Guangdong, the most affluent province in China, as an example,
Chen et al. (2017) analyzed if the carbon tax rate is around 50–100
RMB/ton-CO2, the energy consumption of Guangdong Province can be
reduced by 5.8–11.21%, and carbon emission can be reduced by
5.94–11.61%. As for an inland city, Chongqing, industrial competitive-
ness should be affected heterogeneously by the implementation of the
carbon tax (Xie et al., 2018). The hybrid systems could achieve the
same CO2 emission goal with a lower permit price and GDP loss (Cao
et al., 2019).
Most of the researches presented above indicate that the implemen-
tation of the carbon tax has a positive effect on carbon reductions. How-
ever, the total amount of carbon reductions is closely related to the
growth of GDP, energy structure, and tax rate.
This research differs from the papers reviewed above in several
ways. We study the effects of the carbon tax on emission reduction
and the economic output by the contrastive analysis of the scenarios
with and without a carbon tax. Moreover, the effects of the carbon tax
on carbon reductions and GDP development are analyzed by various in-
dicators including the amount of GDP loss, the rate of GDP loss, carbon
emission intensity per unit GDP, and the cost of per unit CO2 reductions.
In the end, we compare the effects of the carbon tax policy under differ-
ent tax rates and put forward several policy recommendations. The
main contribution of this research lies in the evaluation models com-
bined with the energy substitution theory and input-output theory, as
well as the detailed analysis of the impacts on eight sectors in China.
The remainder of this research is organized as follows. Section 3 is the
method of this research. Section 4 is the results of the empirical analysis.
Section 5 is the conclusions and policy implications.
3. Research method
The key to analyzing the effect of carbon tax lies in the comparative
analysis of the economic development and CO2 emission with or
3
Science of the Total Environment 762 (2021) 143093
without carbon taxation. Therefore, we establish the following two sce-
narios: scenario F (the scenario without a carbon tax) and scenario T
(the scenario with a carbon tax). In scenario F, according to the planning
requirements of the Chinese government and the historical data of GDP
and CO2 emissions, the trends of GDP and CO2 in the future are pre-
dicted. In scenario T, we introduce the carbon tax into the analysis of
the scenario F based on the input-output theory, CD production func-
tion, and energy substitution theory. Therefore, the GDP growth and
CO2 emissions are re-predicted based on the new functions. By compar-
ing the future GDP and CO2 emissions in the two scenarios, this paper
analyzes the effect of the carbon tax on carbon emission reduction and
its impact on the economy.
3.1. Scenario and model without carbon taxation
3.1.1. Description of the scenario
The Chinese government has a strong constraint on the target of eco-
nomic development. Therefore, we need to consider both the economic
development inertia and the government's constrained goals in the
analysis or prediction of the Scenario F. The former can be understood
as the upper limit of the Scenario F (Scenario F-upper), while the latter
can be understood as the lower limit of the Scenario F (Scenario F-
lower). In Scenario F-upper, the fluctuation and dynamic of the external
environment are ignored while predicting the trend of GDP and CO2
emissions. The inertia of economic development is highlighted. The Sce-
nario F-upper can be regarded as the most ideal scenario for the eco-
nomic development of China. In Scenario F-lower, the growth rate of
GDP and the target of carbon emission reduction are set according to
the GDP development targets, carbon emission reduction, and energy
control targets proposed by the Chinese government. These targets are
generally mandatory and can be regarded as the lower limit of eco-
nomic and social development. The scenario F-lower can be regarded
as the economic development goal that the Chinese government must
achieve. The final prediction results of Scenario F are the tradeoff be-
tween maximizing the total GDP and minimizing the total CO2 emis-
sions within the upper and lower limits.
In scenario F-upper, the trends of GDP and CO2 in the future are pre-
dicted based on the GDP growth and CO2 emissions historical data. The
basic data of GDP are obtained from the China Statistical Yearbook, and
the data of different sectors are obtained from the input-output table.
On this basis, this paper uses the Kalman filter method and the ARIMA
model to make predictions.
Specifically, the observation data should be transformed into a sta-
tionary series by differential processing since in continuous time the
GDP data of various sectors do not satisfy the weak stationarity condi-
tion. Afterward, the random time series can be generated by using the
autoregressive moving average process in which the series can be ex-
plained by the parameters and the stochastic disturbances, that is,
xt ¼ c þ xt−1 ⋯ þ ϕp  xt−p þ εt−1 −⋯−θq  εt−q ; ð1Þ
where c is a constant term, εt and its postposition terms are the white
noise. However, in this research, it is found that only using the moving
average method in the model cannot eliminate the random fluctuation
of data effectively in the prediction process, which leads to inaccurate
prediction results. Therefore, referring to the research by Hadeed et al.
(2020), the Kalman filter algorithm is introduced to greatly reduce the
data fluctuation. In other words, by fitting the observed index value of
the existing GDP data to the previous value, the recursive relationship
of the Kalman filter method is employed to predict the future economic
state. Consequently, the following process signal equation and process
state equation are utilized:
yt ¼ Z t  xt þ μ t ; t ¼ 1; 2; ⋯; T; ð2Þ
xt ¼ At  xt−1 þ Bt  U t þ εt ; t ¼ 1; 2; ⋯; T; ð3Þ
J. Liu, J. Bai, Y. Deng et al.
in which yt is a k × 1 dimensional vector of given data, xt is a m × 1 di-
mensional state vector，Zt is a k × m matrix of the time-varying coeffi-
cient of the predicted values, At is a m × m variable parameter matrix, Ut
is g × 1 dimensional control vector, and Bt is a g × m matrix. We can use
the given data to make a prediction based on Eqs. (2) and (3), that is,
^xtjt−1 ¼ At  ^
xt−1jt−1 þ Bt  U t : ð4Þ
Combining the predicted values with the Kalman gain, we obtain the
optimal filtering estimation value of the future stage data, that is,


^xtjt ¼ ^
xtjt−1 þ Kg ðt Þ yt −Z t  ^xtjt−1 :
The expression of Kalman gain is Kg(t) = Pt∣t−1 ⋅ Zt′/(Zt ⋅ Pt∣t−1 ⋅ Z′ + Rt).
We can accurately estimate the economic output of different sectors
in the period from 2020 to 2025 and make a forward-looking forecast of
the economic trend by the methods above.
According to the energy consumption data of each industry and the
carbon conversion coefficients of different energy sources, the CO2
emissions of each industry in 2009–2017 can be obtained. However,
since the CO2 emissions are restricted by many different factors, the cor-
relation analysis on the deviation degree of each influencing factor
needs to be made before prediction. Grey model GM (1,1) is a method
suitable for the short-term prediction of a small amount of data by mul-
tiple uncertain factors (He et al., 2019). Therefore, this paper processes
the original data by this method and uses the ARMA model to predict
the CO2 emissions of each sector referring to the approach proposed
by Masselot et al. (2018).
In scenario F-lower, the trends of GDP and CO2 in the future are pre-
dicted based on the planning requirements of the Chinese government.
The main prediction basis of the GDP development trends in this sce-
nario is obtained from the report of China and the world economic re-
search center of Tsinghua University.1 The comprehensive analysis
result shows that the annual growth rate of China's GDP should not be
less than 5.81%. Similarly, we assume that the growth rate of each sector
is the development rate of the overall economy. In 2009, the Chinese
government stated that the carbon dioxide emission per unit of GDP
(carbon dioxide emission intensity per unit of GDP) in China should
be 40% - 45% lower in 2020 than that in 2005. We take this value as
the minimum goal for the carbon emission reduction of China. Based
on this goal and the value of the forecasted GDP, the amount of carbon
dioxide emissions can be calculated. On this basis, we assume that the
emission reduction speed of all sectors equals the emission reduction
speed of the total CO2 emission.
3.1.2. Carbon emission evaluation model without carbon taxation
In the previous section, the upper and lower values of the GDP and
CO2 emissions of the whole economic sector are obtained by the sce-
nario design. On this basis, we make an analysis considering the double
goals of GDP and CO2 emissions.
1. Objective function
We pursue the win-win results of economic development and car-
bon emission reduction, that is, to maximize GDP and minimize CO2
emissions. Therefore, the objective function can be divided into two
parts: GDP and total CO2 emissions. First, GDP should be maximized:
X
8 of achieving both the economic goal (GDP) and the carbon emission
MaxGDP ¼ Max V i  Xi ;
i¼1
in which Vi is the added value rate of sector i; Xi is the total output of sec-
P the CO2 emission goal which can also be obtained by the grey
tor i, Vi ∗ Xi is the GDP of sector i; 8i¼1 V i  X i refers to the total GDP of
China.
1
CCER. Chinese Economy after the 19th National Congress 2018, 2035 and 2050[R].
2017. http://www.ccwe.tsinghua.edu.cn/info/CMR/2242
4
Science of the Total Environment 762 (2021) 143093
The total CO2 emission needs to be minimized:
0 1
X
8 X8
MinCO2 ¼ Min @ C ij  eij  X i A;
i¼1 j¼1
in which j refers to the type of energy, cij refers to the CO2 emission co-
efficient of j in sector i, eij refers to the input coefficient of energy j in sec-
P
tor i; Xi is the total output of sector i, 8j¼1 C ij  eij  X i refers to the total
amount of CO2 emissions in sector i.
2. Constraints
According to the input-output theory, the final output of each sector
must meet the minimum requirements of its final demand, that is,
ðI−DÞi  X ≥Y i ;
in which I is the unit matrix, D is the direct consumption coefficient ma-
trix, I and D is the unit matrix of 8 ∗ 8, X is the row vector of 8 ∗ 1, Yi rep-
resents the lowest value of the final demand for sector i.
Considering the limitation of GDP and total CO2 emissions and short-
ening the operation time of the model, the upper and lower limits of
GDP and total CO2 emissions of each sector are set, namely:
X i ≤X i (i = 1, 2, ……, 8),
in which X i is the upper limit of sector i which is also the Scenario F-
upper value analyzed above.
From the perspective of energy consumption, we have.
ei X i ≤Ei and ei X i ≥Ei ,
in which ei is the total energy input coefficient; Ei and Ei are the
upper and lower limit values of sector i, respectively. They can be
inverted by using the value of CO2 emissions. For the convenience of cal-
culation, the unit of the energy value is “kcal”.
3. Overall model
The Scenario F-upper and the Scenario F-lower are the goal values in
an ideal environment. Therefore, they provide the upper and lower
values of GDP and CO2 emissions. In practice, the decision-maker
needs to obtain an acceptable solution (GDP has a lower limit, and car-
bon emissions have an upper limit), rather than an absolute optimal so-
lution. Therefore, by introducing the decision operator α, the model
above is transformed as follows.
Objective function:
Max α:
Constraint:
P8

i¼1 V i  X i − Ggoal −dg
≥α;
dg

 P P8 
C goal þ dc − 8i¼1 j¼1 cij  eij  X i
≥α:
dc
Among them, the decision-making operator α indicates the degree
reduction goal (CO2); Ggoal is the goal value of GDP; dg is the tolerance
degree to the GDP goal which can be obtained by the grey prediction
model. Cgoal is the CO2 emission goal. dc is the tolerance degree to
P
prediction model. 8i¼1 V i  X i represents the total economic volume
P8 P8
and i¼1 ð j¼1 cij  eij  X i Þ represents the total emission of CO2. In the
case of a feasible solution with the maximum value of α, the largest
GDP and the smallest CO2 emission can be achieved simultaneously by
the most effective cost. Therefore, based on the total GDP and CO2
J. Liu, J. Bai, Y. Deng et al.
Fig. 1. Trend of GDP from 2020 to 2025 of China in Scenario F.
emissions with the maximum value of α, we can get the predicted
values of the total GDP and CO2 emissions in China from 2020 to 2025
in normal conditions, which are shown in Fig. 1 and Fig. 2, respectively.
3.2. Scenario and model with carbon taxation
3.2.1. Carbon emission evaluation model with carbon taxation
In the scenario with a carbon tax, the energy price will increase inev-
itably, which impacts the GDP in two aspects. First, according to the CD
production function, the rise in energy prices would lead to the change
of output. Based on the input-output theory, it can be considered that
the changes of both the original input (O) and the intermediate input
(Y) result in the change of GDP (V). Second, according to the energy
substitution theory, the rise in energy prices would give rise to the mu-
tual substitution of energies. Therefore, the structure of energy
Fig. 2. Trend of CO2 emissions from 2020 to 2025 of China in Scenario F.
5
Science of the Total Environment 762 (2021) 143093
consumption in different sectors will change, which results in the
change of the energy input coefficient among the sectors. Consequently,
there is a functional relationship between the changes of different en-
ergy demands and the price change mentioned above. The correlation
between them can be obtained by the cross-elasticity coefficient of
energy.
Based on the analysis above, the substitution between energy and
other factors of production caused by the fluctuation of energy price
brought by the carbon tax is the basis of the change of GDP and CO2
emission level. Therefore, the corresponding model method and steps
are as follows:
1. Changes in energy prices
Suppose that the price of crude oil in the base period is P, the abso-
lute value of the increased cost caused by the carbon tax is ΔP, then
the percentage of energy price change caused by the carbon tax is
J. Liu, J. Bai, Y. Deng et al.
 4. Empirical analysis
P 0 ¼ PþΔP P
þ ΔP 0 ;
 4.1. Data source
in which PþΔP P means the percentage of energy cost increase caused by
the carbon tax and ΔP0 means the percentage of energy price change
caused by other factors. In this paper, ΔP0 is obtained by the change of
the energy price index. Combining the price change caused by the car-
bon tax and other factors, we obtain that the rate of energy price change
after increasing carbon tax is P′.
Therefore, the energy price change PΔj of sector j can be calculated by
weighting as follows:
P8
P 0j  Ei
P Δj ¼
i¼1
P8 ;
i¼1 Ei
in which Ei is the total amount of energy i consumed by sector j (sum-
P
marized in terms of the heat value), 8i¼1 Ei represents the total amount
of the energy consumed by sector j.
2. Change of added value
According to the input-output theory, the added value change of the
sector caused by the energy price change can be calculated by the fol-
lowing equation:
ΔO j ¼ P Δj  EKE  K þ P Δj  ELE  L;
in which ΔOj represents the change of the original input of sector j, and
K, L represents the capital input and labor input of sector j, respectively.
EKEis the cross elasticity coefficient of capital energy. ELE is the cross elas-
ticity coefficient of labor energy. EKE, ELErepresent the change of capital
and labor, respectively, while the energy price changes by 1%.
Similarly, the change of industrial intermediate input caused by the
energy price change can be calculated as:
ΔY j ¼ P Δj  EEE  C E þ P Δj  EME  M;
in which ΔYjrepresents the change of intermediate input of sector j, and
CE, M represents the total energy consumption cost and intermediate
material input of sector j, respectively. EEE refers to the self-elasticity co-
efficient of energy, representing the change of energy input while the
energy price changes by 1%. EME is the cross-elasticity coefficient of ma-
terial and energy, representing the change of intermediate material in-
put while the energy price changes by 1%.
Therefore, considering the changes in the original input ΔOj and the
intermediate input ΔYj, we can get the change of the added value rate of
sector j after the carbon tax:
O j þ ΔO j
V Δj ¼

;
Y j þ ΔY j þ O j þ ΔO j
in which Oj, Yj represents the added value and intermediate input of sec-
tor j before carbon taxation, respectively. Therefore, the GDP output
value of sector j after carbon taxation is Oj.
3.2.2. Determination of the carbon tax rate
While designing the carbon tax rate level, the following factors
should be taken into consideration: (1) the effect of CO2 emission reduc-
tion, (2) the impact on normal production, operation behavior, and
market competitiveness, and (3) the social acceptance to reduce social
resistance to the carbon tax. Based on the practice of the Ministry of Fi-
nance of China and the research of China Environmental Protection In-
ternational Association, referring to the price of carbon quota in the
carbon trading pilot in China, this paper analyzes the conditions with
the carbon tax rate of 20 RMB/ton-CO2, 50 RMB/ton-CO2, and 100
RMB/ton-CO2, respectively. In this paper, the whole sector is analyzed
as a taxpayer.
6
Science of the Total Environment 762 (2021) 143093
We select the data in the period from 2009 to 2017 to make predic-
tions and analyses of the total GDP and CO2 emissions. The data of GDP
are acquired from the 2010–2018 China Statistical Yearbook. The CO2
emission is calculated from the energy consumption of different indus-
tries and varieties provided by China Statistical Yearbook and China En-
ergy Statistical Yearbook.
We use the input-output table to calculate the GDP output and CO2
emissions of various industries. The 42 sectors in China's input-output
table are regrouped into 8 sectors, including the agriculture, forestry,
animal husbandry, and fishery industry (sector 1); mining industry
(sector 2); manufacturing industry (sector 3); power, gas, and water
production and supply industry (sector 4); construction industry (sec-
tor 5); transportation, storage, and postal industry (sector 6); wholesale
and retail, accommodation and catering industry (sector 7); other in-
dustries (sector 8). The remainder of this paper will analyze the carbon
emissions and GDP development level of the 8 sectors in the context of
carbon taxation. Additionally, we classify the 8 sectors based on the 3
major industries and supplement the missing GDP value of the 8 sectors
based on the average growth rate of the industries in the corresponding
years. Moreover, we can see from the models above that the basic data
in the models mainly include the price data P, the elastic value E that af-
fects the added value and the added value rate, input factor labor L , and
capital input K.
(1) Data sources of the price. There are eight types of energy in-
volved in this study, including crude oil, natural gas, fuel oil, gas-
oline, kerosene, coal, coke, and diesel. All these data are obtained
from the CEIC data China database and supplemented with China
Energy Data Manual and China price information network. Some
missing data is adjusted and supplemented according to the fac-
tory price index of different energy sources in the statistical year-
book.
(2) Data sources of element input. This paper mainly involves four
kinds of inputs. The factors that affect the added value include
capital input K and labor input L. The factors that affect the inter-
mediate input include energy consumption cost CE and interme-
diate material input M.The capital input value K of the sub-
sectors is replaced by the total fixed-asset investment of the
sub-sector. The labor input data L of the sub-sector is replaced
by the employment data of the sub-sector which are obtained di-
rectly from the China Statistical Yearbook. Energy consumption
cost CE is obtained by multiplying the energy consumption data
(physical volume) over the years by the energy price. The inter-
mediate material input M is obtained from the intermediate
input (magnitude of value) in the input-output table over the
years.
(3) Elastic data sources. The elastic data involved in this study
mainly refers to the relevant researches of other scholars, includ-
ing the cross elastic coefficient of capital and energy EKE (Frondel,
2004), the cross elastic coefficient of labor and energy ELE (Ma
et al., 2009), the self-elastic coefficient of energy EEE (Frondel,
2004), and the cross elastic coefficient of material and energy
EME(Ma et al., 2009).
4.2. Calculation results
4.2.1. Calculation results of the scenario without carbon taxation
Based on the data above, we evaluate the GDP value and CO2 emis-
sion value based on the method mentioned in the previous section
while integrating the Scenario F-upper and the Scenario F-lower values.
The trends of GDP output and CO2 emissions of various industries in
2020–2025 are shown in Table 1 and Fig. 3, respectively.
J. Liu, J. Bai, Y. Deng et al. Science of the Total Environment 762 (2021) 143093

Table 1
Descriptive statistics of GDP and CO2 emissions in 2020–2025 in Scenario F.

GDP (2020–2025) CO2 emission (2020–2025)

(trillion RMB) (100 million tons)

Max Min Annual growth rate Max Min Annual growth rate

Total 141.74 105.92 6.00% 190.77 151.52 4.71%

Sector 1 9.28 6.71 6.70% 2.68 1.22 17.05%
Sector 2 7.53 5.81 5.32% 11.59 8.75 5.78%
Sector 3 40.01 31.75 4.73% 82.42 76.89 1.40%
Sector 4 4.88 3.81 5.07% 69.52 52.66 5.71%
Sector 5 7.41 5.78 5.09% 1.51 0.61 19.88%
Sector 6 6.04 5.12 3.36% 11.51 8.38 6.55%
Sector 7 11.45 9.28 4.29% 2.19 0.97 17.69%
Sector 8 55.13 37.66 7.92% 3.43 2.05 10.84%

4.2.2. Calculation results of the scenario with carbon taxation
This section takes the carbon tax rate of 20 RMB/ton-CO2 as an ex-
ample to explain the process of GDP and CO2 changes in various eco-
nomic sectors after carbon taxation. Based on the methods mentioned
in the previous section, the development trends of GDP output and
CO2 emissions of various industries in 2020–2025 can be obtained
which are shown in Table 2 and Fig. 4, respectively.
4.3. Analysis of the calculation results
4.3.1. The impact of carbon taxation on the economy
The impact of the carbon tax on macroeconomy can be analyzed in
the following two aspects. One is the absolute reduction of GDP,
which indicates the absolute impact of the carbon tax on output. The
other is the relative loss rate of GDP, which is equal to the absolute re-
duction value of GDP or GDP value in the basic period (Table 3).
It can be seen from Table 3 that the impact of the carbon tax on the
GDP of China shows the following characteristics.
Carbon taxation affects the GDP growth of China significantly. In the
short term (before 2025), the absolute loss value and relative loss rate of
GDP will grow slowly. Specifically, the absolute loss of GDP will increase
from 419.6 billion RMB in 2020 to 641.144 billion RMB in 2025, while
the relative loss rate in the same period will increase from 0.4% to 0.45%.
In terms of sub-sector, the absolute loss of GDP in other sectors
keeps rising, except for sector 1. Besides, sector 3, sector 8, and sector
7 ranks the top three. The absolute value of GDP reduction of the three
sectors accounts for 78.8%, which is closely related to the total economic
volume of the three sectors themselves. There is no significant differ-
ence between the GDP growth rate of each sector before carbon taxation
and that after carbon taxation.
Overall, the carbon tax has a greater impact on the GDP loss of sector
7, sector 6, and sector 3, while the impact on sector 1 (agriculture, for-
estry, animal husbandry, and fishery) is the least. The reason is that
the use of fossil energy directly determines the amount of carbon tax.
Sector 3 is the largest sector of economic development and carbon emis-
sions. The economic development of it is impacted most significantly by
carbon taxation. Sector 6 is small in terms of economic development,
but a large sector in carbon emissions (relative to the total economic

Fig. 3. Trends of GDP and CO2 emissions in 2020–2025 in Scenario F.

7
J. Liu, J. Bai, Y. Deng et al. Science of the Total Environment 762 (2021) 143093

Table 2
Descriptive statistics of GDP and CO2 emissions in 2020–2025 in Scenario T.

GDP (2020–2025) CO2 emission (2020–2025)

(trillion RMB) (100 million tons)

Max Min Annual growth rate Max Min Annual growth rate

Total 141.1 105.5 5.99% 117.34 103.13 2.62%

sector 1 9.25 6.68 6.73% 0.66 0.62 −1.24%
sector 2 7.5 5.79 5.31% 4.66 4.49 −0.74%
sector 3 39.78 31.61 4.71% 43.63 42.52 0.52%
sector 4 4.87 3.8 5.09% 53.04 43.67 3.96%
sector 5 7.4 5.77 5.10% 0.43 0.41 0.96%
sector 6 6 5.09 3.34% 13.1 9.28 7.14%
sector 7 11.38 9.22 4.30% 0.58 0.57 0.35%
sector 8 54.91 37.53 7.91% 1.45 1.36 1.29%

volume). The impact of the carbon tax on this sector is significant. More-
over, the GDP growth rate of sector 3 and sector 6 is lower than the
overall growth rate of the country, which would lead to the increase
of economic development not enough to cover the cost expenditure (in-
cluding investment in technological transformation, energy structure
adjustment, and cost of carbon tax payment). It also shows that these
two sectors still need to further improve the technology and green con-
tent. Besides, the GDP proportion of each sector in the country would
scarcely change in the context of carbon taxation. In other words, car-
bon taxation can hardly affect the economic structure of China.
4.3.2. The impact of carbon taxation on the carbon emissions reduction
We analyze the impact of carbon taxation on the CO2 emissions of
each sector in two aspects. One is the emission reduction rate of CO2.
It is expressed by the reduced amount of CO2 after taxation divided by
the total amount of CO2 before taxation, which shows the direct effect
of carbon emission reduction (Table 4). The other is the intensity of
CO2 emission which means the level of CO2 emission per unit GDP
representing the binding goal of carbon emission reduction formulated
by China (Table 5).
The impact of the carbon tax on the absolute value of CO2 emissions
in various economic sectors can be concluded as follows.
1. The CO2 emission reduction level of China is constantly improving.
Specifically, the CO2 emission reduction rate increases from 31.94%
in 2020 to 38.49% in 2025. It indicates that with the in-depth imple-
mentation of carbon taxation, the effect of the carbon tax on carbon
emission reduction will be increasingly more significant. In terms
of sub-sectors, sector 2, sector 3, and sector 1 are the sectors which
have the highest CO2 emission reduction rate. The emission reduc-
tion level of these three sectors during the sample period is more
than 40%. The reason that sector 1 and sector 2 have such a large
emission reduction is that both have a small volume of total carbon
emissions. By contrast, the reason that sector 3 has a large emission
reduction is that carbon taxation has an extremely large impact on
its production. The significant reduction of economic growth results
in carbon emissions reduction.
It shows that the total carbon emissions of sector 6 (transportation,
warehousing, and post industry) still increase in the context of carbon
taxation, but its growth rate is gradually decreasing. The experience of
the European Union and other regions implies that the transport sector
always lags in carbon emission reduction. On the one hand, the GDP de-
velopment speed of this sector is still at a relatively high level. On the
other hand, the transformation of the energy structure in the transport
sector is relatively slow. Consequently, promoting the use of new en-
ergy vehicles and other initiatives are still necessary measures to pro-
mote carbon emission reduction in the transport sector.
2. In the context that no carbon tax is implemented, although the na-
tional carbon emission intensity level is declining year by year, the
carbon emission intensity of each sector except sector 3 is still on
the rise. While the carbon tax is levied, the average decline rate of
the national carbon emission intensity level in the sample period in-
creases from 1.21% to 3.18%. Except for sector 6, the carbon emission

Fig. 4. Trends of GDP and CO2 emissions in 2020–2025 in Scenario T.

8
J. Liu, J. Bai, Y. Deng et al. Science of the Total Environment 762 (2021) 143093

Table 3 CO2 emission reduction in China but also covers the whole industry
relative loss rate of GDP of economic sectors in China after carbon taxation. from a single sector (sector 3). It suggests that the total emission of sec-
2020 2021 2022 2023 2024 2025 tor 4 is relatively high, but the impact of the carbon tax on its emission
Relative loss rate of GDP 0.40% 0.41% 0.42% 0.43% 0.44% 0.45%
reduction is relatively small. The main reason is that sector 4 is the basic
Sector 1 0.40% 0.37% 0.34% 0.32% 0.30% 0.27% sector of energy security, and the adjustment of the total amount and
Sector 2 0.32% 0.33% 0.34% 0.34% 0.36% 0.37% structure of this sector needs a long time.
Sector 3 0.44% 0.47% 0.49% 0.52% 0.55% 0.58%
Sector 4 0.22% 0.23% 0.23% 0.24% 0.24% 0.24%
4.3.3. Comparison of effect on GDP and CO2 emissions at different tax rates
Sector 5 0.17% 0.17% 0.17% 0.18% 0.18% 0.18%
Sector 6 0.50% 0.52% 0.54% 0.57% 0.60% 0.62% To further measure the effect of different carbon tax levels, this
Sector 7 0.62% 0.62% 0.62% 0.62% 0.61% 0.61% paper considers the tax rates of 100 RMB/ton-CO2 and 50 RMB/ton-
Sector 8 0.35% 0.36% 0.38% 0.39% 0.40% 0.41% CO2. Based on the methods above, the impact of carbon tax collection
on macro-economy and carbon emissions is evaluated under different
tax rates, and the results are compared with the impact of the tax rate
of 20 RMB/ton-CO2.
Table 4
CO2 emission reduction rate after carbon taxation.
Simultaneously, to analyze the cost of carbon emission reduction
under different tax rates, this paper considers the loss of GDP (RMB/
2020 2021 2022 2023 2024 2025 ton-CO2) caused by unit carbon emission reduction as the cost of unit
Total 31.94% 33.36% 34.66% 35.96% 37.17% 38.49% carbon emission reduction. The calculation formula is:
Sector 1 45.90% 53.57% 61.21% 67.53% 72.49% 76.87%
Sector 2 46.74% 49.40% 52.35% 55.27% 58.17% 61.26%
Sector 3 44.70% 45.88% 47.21% 47.09% 46.94% 47.06% ΔGDPi
C CO2 ¼ ;
Sector 4 17.07% 19.01% 20.25% 21.59% 22.69% 23.71% ΔCO2i
Sector 5 32.79% 43.84% 52.27% 60.38% 66.93% 71.52%
Sector 6 −10.74% −11.84% −12.38% −13.21% −13.65% −13.81%
Sector 7 41.24% 50.00% 56.72% 63.52% 68.98% 73.52% in which ΔGDPi is the absolute loss value of the GDP of sector i, ΔCO2i
Sector 8 33.66% 39.21% 44.22% 49.46% 53.72% 57.73%
represents the absolute reduction value of CO2 of sector i, CCO 2 is the cost
per unit of CO2 emission reduction.
The carbon tax assessment results at the three tax rates, respectively,
Table 5 are shown in Table 6.
Emission intensity of unit GDP after carbon taxation. It can be seen from Table 6 that in terms of absolute loss and relative
2020 2021 2022 2023 2024 2025 loss rate of GDP, the higher the tax rate level is, the higher the absolute
loss of GDP should be. The increasing rate of loss gradually decreases
Total 0.978 0.945 0.915 0.886 0.859 0.832
Sector 1 0.099 0.091 0.084 0.077 0.073 0.067 with the rising tax rate level. Moreover, at the low tax rate level, the rel-
Sector 2 0.805 0.752 0.705 0.662 0.630 0.598 ative impact of the carbon tax on GDP gradually reduces. By contrast, at
Sector 3 1.345 1.302 1.250 1.201 1.152 1.097 the middle and high tax rates, the level of GDP loss rate shows a slow-
Sector 4 11.487 11.304 11.182 11.128 11.005 10.895 growth trend. This implies that a higher tax rate gives rise to the reduc-
Sector 5 0.071 0.068 0.066 0.063 0.060 0.058
Sector 6 1.822 1.881 1.956 2.066 2.127 2.182
tion of the CO2 emission level while making the absolute loss and rela-
Sector 7 0.062 0.060 0.059 0.056 0.053 0.051 tive loss rate of GDP fluctuate greatly, which also rapidly increases the
Sector 8 0.036 0.034 0.032 0.030 0.028 0.026 average cost of carbon emission reduction. Thus, carbon emission re-
duction is not significantly economical.
Therefore, China needs to set the carbon tax at a lower level in the
intensity level of most sectors is declining, and the carbon emission
short term to avoid a huge negative impact on the normal production
in all the sectors achieves a comprehensive emission reduction. The
and operation of enterprises. At this level, we need to achieve the goal
reason why the carbon emission intensity of sector 6 still on the rise
of carbon emission reduction, as well as achieve an effective balance be-
is that the total emissions of this sector continuously increase.
tween the economy and carbon emission goal. This is also consistent
with the implementation path of the carbon tax policy in Canada
Overall, the carbon tax plays a pivotal role in promoting carbon which starts from a relatively low tax rate to reduce the impact of the
emission reduction in China. It not only promotes the total amount of policy, and then gradually adjusts the tax rate level according to the

Table 6
Impact of carbon tax on economics and carbon emissions at different tax rates.

2020 2021 2022 2023 2024 2025

Tax rate:20RMB/ton-CO2
GDP loss value 4196.00 4568.98 4970.54 5407.90 5885.89 6411.44
Loss rate 0.40% 0.41% 0.42% 0.42% 0.44% 0.45%
Carbon emission intensity per unit GDP 0.97 0.94 0.91 0.88 0.86 0.83
Cost per unit of CO2 emission reduction 86.71 86.39 86.50 86.58 86.98 87.31

Tax rate:50 RMB/ton-CO2

GDP loss value 6609.883 7202. 06 7838.29 8530.36 9287.74 10,143.43
Loss rate 0.63% 0.64% 0.64% 0.64% 0.66% 0.67%
Carbon emission intensity per unit GDP 0.96 0.93 0.91 0.87 0.86 0.82
Cost per unit of CO2 emission reduction 134.84 134.17 134.62 135.04 135.69 135.88

Tax rate:100 RMB/ton-CO2

GDP loss value 17,469.7 19,021.55 20,692.50 22,512.99 24,502.23 26,685.18
Loss rate 0.99% 1.01% 1.01% 1.00% 1.02% 1.02%
Carbon emission intensity per unit GDP 0.96 0.93 0.90 0.87 0.86 0.81
Cost per unit of CO2 emission reduction 211.79 210.70 211.85 212.84 214.22 214.79

9
J. Liu, J. Bai, Y. Deng et al.
needs of emission reduction goals and the pace of economic
restructuring.
5. Conclusions and policy implications
According to the win-win target of carbon reduction and GDP
growth, this paper establishes a new model based on the energy substi-
tution theory and input-output theory to evaluate the effectiveness of
carbon taxation on the eight sectors of China. The findings provide sci-
entific evidence and suggestions for the implementation of the carbon
tax on various industries. The main conclusions are as follows:
1. The carbon tax is conducive to the rapid promotion of CO2 emission
reduction in China. The research results show that the total amount
of CO2 emission reduces year by year after the carbon tax is levied.
The higher the tax rate is, the more obvious the effect on the CO2
emission reduction should be. Simultaneously, carbon taxation
makes the carbon emission reduction of China no longer rely on a
single sector, but the whole industry.
2. Carbon taxation has a significant impact on the economic develop-
ment of China. The higher the tax rate level, the greater the impact
should be. However, on a fixed carbon tax level, the damage caused
by the carbon tax on economic development gradually reduces
over time. Additionally, in the condition of the unified tax rate of
the whole industry, the carbon tax has no significant impact on the
economic structure of China. Therefore, we suggest that the govern-
ment should reward enterprises in reducing the carbon emission by
tax returns. It is mainly utilized to subsidize the usage of low-carbon
energy, low-carbon technology transformation, and upgrading of the
enterprises. This will help the enterprises control the cost of carbon
emission reduction and reduce the impact on economic output.
However, the subsidies should be moderate because the enterprises
may rely too much on subsidies and ignore the necessary production.
3. Considering the cost of carbon emission reduction, the carbon tax
should be set at a lower tax rate level, which can ensure that China
achieves the constraint goal of carbon emission reduction at the low-
est economic cost. In addition, we suggest establishing a buffer pe-
riod for the implementation of the carbon tax policy. In the initial
stage, a relatively low tax rate should be set, and the object of taxa-
tion should be the large enterprises with good profitability. After-
ward, the number of taxation objects can be gradually increased,
which can reduce the impact on the economic output of the whole
sector. This approach is also conducive to the enterprises to gradually
adapt to the carbon emission control. Moreover, it enables them to
adjust the existing production and operation mode while
implementing technical transformation and upgrading.
4. Sector 3 (manufacturing industry) is the largest sector of economic
development and carbon emissions in which the carbon emission
has the largest direct impact on the GDP. Moreover, the growth
rate of sector 3 is lower than the national average, which makes the
cost of emission reduction in the initial stage very high. Besides, it
is necessary to support the sectors which are seriously affected neg-
atively by some policy designs such as tax rebates. However, the total
carbon emission of sector 6 (transportation, storage, and postal in-
dustry) is still rising in the context of the carbon tax. It implies that
it is invalid to promote carbon emission only by the cost forcing
due to the influence of industry characteristics (the adjustment of
the energy structure of traditional transportation takes time). It
needs to further promote the sector from the supply-side policies,
such as increasing the promotion of new energy vehicles to adjust
the energy structure and then reduce carbon emissions.
CRediT authorship contribution statement
LIU Xiang: Methodology, Data analysis, Writing - Original draft
preparation; LIU Jia: Data collection, Data analysis, results discussion;
10
Science of the Total Environment 762 (2021) 143093
CHEN Xiaohong: Data analysis, results discussion; BAI Jinyu: Writing-
Reviewing and Editing; DENG Yi: Writing- Reviewing and Editing.
Declaration of competing interest
The authors declare no conflict of interest.
Acknowledgements
This research was supported by the National Natural Science Foun-
dation of China (grant number 71601148, 71790615, 91846301); Key
research base of Humanities and social sciences in Guangdong Province
(grant number 2018WZJD007); National Statistical Science Research
Project (grant number 2020LY041).
References
Andersson, J.J., 2019. Carbon taxes and CO2 emissions: Sweden as a case study. Am. Econ.
J. Econ. Pol. 11 (4), 1–30. https://doi.org/10.1257/pol.20170144.
Brian, M., Nicholas, R., 2015. British columbia's revenue-neutral carbon tax: a review of
the latest "grand experiment" in environmental policy. Energy Policy 86 (11),
674–683. https://doi.org/10.1016/j.enpol.2015.08.011.
Bruvoll, A., Larsen, B.M., 2004. Greenhouse gas emissions in Norway: do carbon taxes
work? Energy Policy 32, 493–505. https://doi.org/10.1016/S0301-4215(03)00151-4.
Burtraw, D., Krupnick, A., Palmer, K., Paul, A., Toman, M., Bloyd, C., 2003. Ancillary benefits
of reduced air pollution in the US from moderate greenhouse gas mitigation policies
in the electricity sector. J. Environ. Econ. Manag. 45, 650–673. https://doi.org/
10.1016/S0095-0696(02)00022-0.
Cao, J., Ho, M.S., Jorgenson, D.W., Nielsen, C.P., 2019. China’s emissions trading system and
an ETS-carbon tax hybrid. Energy Econ. 81, 741–753. https://doi.org/10.1016/j.
eneco.2019.04.029.
Chen, S.Y., 2013. What is the potential impact of a taxation system reform on carbon
abatement and industrial growth in China? Econ. Syst. 37, 369–386. https://doi.org/
10.1016/j.ecosys.2013.03.001.
Chen, W., Zhou, J.F., Li, S.Y., Li, Y.C., 2017. Effects of an energy tax (carbon tax) on energy
saving and emission reduction in Guangdong Province-based on a CGE model. Sus-
tainability 9. https://doi.org/10.3390/su9050681.
CRIFS, 2009. Research into Carbon Taxation Issues in China. Chinese Academy of Fiscal
Science, the Ministry of Finance of China, Beijing.
Energy Research Institute, 2010. China Carbon Taxation Framework Design. Energy Re-
search Institute (ERI), the National Development and Reform Commission of China
(NDRC), Beijing.
Fang, G.C., Tian, L.X., Fu, M., Sun, M., 2013. The impacts of carbon tax on energy intensity
and economic growth–a dynamic evolution analysis on the case of China. Appl. En-
ergy 110, 17–28. https://doi.org/10.1016/j.apenergy.2013.04.041.
Floros, N., Vlachou, A., 2005. Energy demand and energy-related CO2 emissions in Greek
manufacturing: assessing the impact of a carbon tax. Energy Econ. 27, 387–413 (doi:
0.1016/j.eneco.2004.12.006).
Frondel, M., 2004. Empirical assessment of energy-price policies: the case for cross-price
elasticities. Energy Policy 32 (8), 989–1000. https://doi.org/10.1016/j.
eneco.2014.08.016.
Godal, O., Holtsmark, B., 2001. Greenhouse gas taxation and the distribution of costs and
benefits: the case of Norway. Energy Policy 29, 653–662. https://doi.org/10.1016/
S0301-4215(00)00158-0.
Guo, Z.Q., Zhang, X.P., Zhang, Y.H., Rao, R., 2014. Exploring the impacts of a carbon tax on
the Chinese economy using a CGE model with a detailed disaggregation of energy
sectors. Energy Econ. 45, 455–462. https://doi.org/10.1016/j.eneco.2014.08.016.
Hadeed, S.J., O’Rourke, M.K., Burgess, J.L., Harris, R.B., Canales, R.A., 2020. Imputation
methods for addressing missing data in short-term monitoring of air pollutants. Sci.
Total Environ. 730, 139–140. https://doi.org/10.1016/j.scitotenv.2020.139140.
Haites, Erik, 2018. Carbon taxes and greenhouse gas emissions trading systems: what
have we learned? Clim. Pol. 18 (6–10), 955–966. https://doi.org/10.1080/
14693062.2018.1492897.
He, L.Y., Pei, L.L., Yang, Y.H., 2019. An optimised grey buffer operator for forecasting the
production and sales of new energy vehicles in China. Sci. Total Environ. 704,
135321. https://doi.org/10.1016/j.scitotenv.2019.135321.
Lee, C.F., Lin, S.J., Lewis, C., 2007. Effects of carbon taxes on different industries by fuzzy
goal programming: a case study of the petrochemical-related industries, Taiwan. En-
ergy Policy 35, 4051–4058. https://doi.org/10.1016/j.enpol.2007.02.012.
Lee, C.F., Lin, S.J., Lewis, C., 2008. Analysis of the impacts of combining carbon taxation and
emission trading on different industry sectors. Energy Policy 36, 722–729. https://doi.
org/10.1016/j.enpol.2007.10.025.
Li, W., Jia, Z.J., 2017. Carbon tax, emission trading, or the mixed policy: which is the most
effective strategy for climate change mitigation in China? Springer Netherlands 22
(6). https://doi.org/10.1007/s11027-016-9710-3.
Li, Z.L., Dai, H.C., Song, J.N., 2019. Assessment of the carbon emissions reduction potential
of China’s iron and steel industry based on a simulation analysis. Energy 183,
279–290. https://doi.org/10.1016/j.energy.2019.06.099.
Liu, Z.Y., Mao, X.Q., Tu, J.J., Jaccard, M., 2014. A comparative assessment of economic-
incentive and command-and-control instruments for air pollution and CO2 control
J. Liu, J. Bai, Y. Deng et al.
in China’s iron and steel sector. J. Environ. Manag. 144, 135–142. https://doi.org/
10.1016/j.jenvman.2014.05.031.
Ma, H., Oxley, L., Gibson, J., 2009. Substitution possibilities and determinants of energy in-
tensity for China. Energy Policy 37 (5), 1793–1804. https://doi.org/10.1016/j.
enpol.2009.01.017.
Masselot, P., Chebana, F., Belanger, D., St-Hilaire, A., Abdous, B., Gosselin, P., Ouarda,
T.B.M.J., 2018. Aggregating the response in time series regression models, applied
to weather-related cardiovascular mortality. Sci. Total Environ. 628, 217–225.
https://doi.org/10.1016/j.scitotenv.2018.02.014.
Meng, S., Siriwardan, M., McNeill, J., 2013. The environmental and economic impact of the
carbon tax in Australia. Environmental & Resource Economics 54, 313–332. https://
doi.org/10.1007/s10640-012-9600-4.
Metcalf, Gilbert E., 2019. On the Economics of a Carbon Tax for the United States,
Brookings Papers on Economic Activity. (Spring). , pp. 405–458 https://doi.org/
10.1353/eca.2019.0000.
Mian, Y., Fan, Y., Yang, F.X., Hu, H., 2014. Regional disparities in carbon dioxide reduction
from China’s uniform carbon tax: a perspective on interactor/interquel substitution.
Energy 74, 131–139. https://doi.org/10.1016/j.energy.2014.04.056.
Orlov, A., Grethe, Harald, Scott, M., 2013. Carbon taxation in Russia: prospects for a double
dividend and improved energy efficiency. Energy Econ. 37, 128–140. https://doi.org/
10.1016/j.eneco.2013.01.008.
Refinitiv, 2020. Review of Carbon Markets: 2019 Overview. https://www.refinitiv.com/
content/dam/marketing/en_us/documents/reports/global-carbon-market-emission-
trading-system-review-2019.pdf. Refinitiv.
11
Science of the Total Environment 762 (2021) 143093
Sun, R., Kuang, D., 2015. CGE model-based analysis of the neutralized hybrid carbon policy
and its decomposed effects on economic growth, carbon reduction, and energy utili-
zation costs. Chinese Journal of Population Resources and Environment 13, 43–54.
https://doi.org/10.1080/10042857.2015.1005345.
Tietenberg, T.H., 2013. Reflections-carbon pricing in practice. Rev. Environ. Econ. Pol. 7
(2), 313–329. https://doi.org/10.1093/reep/ret008.
Wiseman, W., Dellink, R., 2007. AGE analysis of the impact of a carbon energy tax on
the Irish economy. Ecol. Econ. 61, 671–683. https://doi.org/10.1016/j.
ecolecon.2006.07.034.
World Bank, 2020. State and Trends of Carbon Pricing 2020. World Bank, Washington, DC
https://doi.org/10.1596/978-1-4648-1586-7.
Xie, J.Y., Dai, H.C., Xie, Y., Hong, L.X., 2018. Effect of carbon tax on the industrial compet-
itiveness of Chongqing, China. Energy for Sustainable Development 47, 114–123.
https://doi.org/10.1016/j.esd.2018.09.003.
Zhang, K., Xue, M.M., Feng, K.S., Liang, Q.M., 2019. The economic effects of carbon tax on
China’s provinces. Journal of Cleaner Modeling 41, 784–802. https://doi.org/10.1016/
j.jpolmod.2019.02.014.
Zheng, J.L., Qiao, H., Wang, S.Y., 2017. The effect of carbon tax in aviation industry on the
multilateral simulation game. Sustainability 9. https://doi.org/10.3390/su9071247.
Zhou, Y.X., Fang, W.S., Li, M.J., Liu, W.L., 2018. Exploring the impacts of a low-carbon policy
instrument: a case of carbon tax on transportation in China. Resources Conservation
and Recycling 139, 307–314. https://doi.org/10.1016/j.resconrec.2018.08.015.