Abstract
China is preparing to develop and implement an emissions trading system in its 13th five-year plan. Allowance allocation is one of the key issues to settle during the establishment of this system. This study applies the China Energy and Environmental Policy Analysis model to assess how the allowances should be allocated. Simulation results show that, while impacts on China’s economic development vary according to how allowances are allocated, the negative impacts cannot be mitigated completely, which are between −0.5 and −0.1 % when 5 % of carbon emissions are reduced. In terms of the impacts on the macroeconomy, sectoral output, and capital revenue, results suggest that auctioning the allowances and recycling the revenue to reduce the indirect tax will perform best in alleviating the negative impacts. Meanwhile, impacts of carbon mitigation on international competitiveness can be reduced most in the approach where only key energy- and trade-intensive sectors are able to receive free allowances. However, if citizens’ welfare and quality of life is prioritized, auctioning the allowance and transferring the revenue to households in proportion to their occupation will be the most effective approach; in this case, the negative impacts on rural households’ disposable incomes and welfare will be reduced, and the income gap between rural and urban households will be narrowed.
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Acknowledgments
The authors gratefully acknowledge financial support from the National Natural Science Foundation of China under Grant Nos. 71422011, 71461137006, and 71521002; the Programme for New Century Excellent Talents in University under Grant No. NCET-12-0039. We also would like to thank the anonymous referees for their helpful suggestions and corrections on the earlier draft of our paper.
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Yao, YF., Liang, QM. Approaches to carbon allowance allocation in China: a computable general equilibrium analysis. Nat Hazards 84 (Suppl 1), 333–351 (2016). https://doi.org/10.1007/s11069-016-2352-7
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DOI: https://doi.org/10.1007/s11069-016-2352-7