Could China's Long-term Low-carbon Energy Transformation Achieve the Double Dividend Effect for the Economy and Environment?

Achieving low-carbon energy transformation is vital for coordinating economic growth and environmental improvement to satisfy the carbon emissions peak and carbon neutrality targets. Existing studies, however, have been dominated by the mere exploration of the low-carbon transformation pathway with little consideration of the importance of energy substitution in low-carbon transformation. Doing so is believably unable to gain the double dividend effect for the economy and environment. Accordingly, this paper develops three energy-target scenarios, taking into account energy structure, electrification level, and carbon mitigation targets by 2030 announced by the Chinese government. A dynamic multi-sectoral computable general equilibrium model, CHINAGEM, is employed to examine the economic and environmental effects under different pathways of long-term low-carbon transformation. Firstly, we detect that China's primary energy consumption and electricity production structure would substantially transfer to low-carbon and clean along with all three energy-target scenarios. Secondly, due to the anticipated decline of fossil energy consumption, especially coal consumption, China's CO2, SO2, and NOX emissions in 2020-2030 would also possibly vastly abate with all the scenarios. Besides, it is highly conceivable for China to achieve its peak carbon emission of 12.4 GtCO2 in 2028 if it serves the comparatively more stringent low-carbon transformation pathways. Lastly, different pathways would also produce varying positive impacts on China's macro-economy and achieve the different extent of double dividend effects. The research concludes with a recommendation of tentative improvement policies towards low-carbon transformation under the carbon peak and carbon neutrality goals, including promoting energy substitution, renewable energy development, and low-carbon technologies.

Green Tax Reform and Employment Double Dividend in Australia Should Australia Follow Europe’s Footsteps? A CGE Analysis

Australia has one of the highest per capita carbon emissions, and its energy sector contributes significantly to the country’s carbon emissions. Renewable energy and climate change call for a shift from fossil fuels to low-carbon technologies for energy production. Policies aiming to reduce carbon emissions are perceived by many people as leading to higher living costs, but changes in energy policies can also lead to economic gains in the presence of revenue recycling. This article applies a computable general equilibrium approach to study the effect of energy tax in the Australian economy. Four different scenarios of green tax reform (GTR) are simulated to test the employment double dividend (EDD) potential. All four scenarios simulate changes in energy tax and one of four tax revenue recycling policies including (a) value added tax reduction, (b) payroll tax reduction, (c) goods and services tax (GST) reduction and (d) a mixture of all three recycling policies. The results show strong EDD potential of GST and payroll tax reduction when used along with energy tax in a revenue-neutral GTR approach. The study also presents a comparison of an optimal EDD inducive policy design between the European and Australian GTR approaches. JEL classifications: H23, C68, H21, Q48

Double Dividend of the Carbon Tax in Japan: Can We Increase Public Support for Carbon Pricing?

Carbon pricing is difficult to introduce in many countries because it is not easy to obtain public support for carbon pricing due to the burden associated with it. One way to overcome this difficulty is to rely on the double dividend of a carbon tax. If a government uses revenue from a carbon tax to reduce existing distorting taxes, such as corporate taxes or labor taxes, a carbon tax can improve economic efficiency while reducing greenhouse gas (GHG) emissions. This chapter examines the net burden of a carbon tax with revenue recycling (RR) for two types of stakeholders: firms and households. Using dynamiccomputable general equilibrium (CGE) modeling, we examine the carbon prices needed to achieve the emission targets set for 2030 and 2050. Then, we simulate two types of RR: corporate tax reduction and a reduction in social security payments. We compare the benefit of the tax reduction to the increase in the burden from the carbon tax in scenarios for 2030/2050. In the scenario of corporate tax reduction, by selecting firms from the land transportation sector and power sector, we examine how profit changes due to the carbon tax. We find that the tax burden for a firm in the land transportation sector can be eased greatly with the corporate tax reduction. In the scenario of the social security payment reduction, we find that some households are better off under carbon pricing despite expenditure increases due to the carbon tax. Thus, we show that RR can increase support for the carbon tax.