Research on the Influence of Carbon Tax on Carbon Emission and Economic Development in China

Carbon tax is one of ways to cut the emissions of GHG, which has already been employed by the west. To study the effect of carbon tax on energy conservation and carbon reduction in China, a new model is constructed based on dynamic CGE model and the linkage of dynamic CGE model and energy technology model. Besides the improvement of technology of energy, if carbon taxation is employed, the goal to reduce its carbon intensity by 40% by 2020 compared with 2005 need to levy a tax of 60 yuan at least per tonne, the simulations of this tax to carbon reduction, economic and income of residents are analysed under different circumstances, the results shows that there is a great impact on income of residents and GDP with a higher tax burden level.


INTRODUCTION
It is a crucial time to develop economic in China, the demand of energy keep rising, before the Copenhagen Climate Change Confenerce 2009, China State Council decleared its goal to reduce its unit GDP CO 2 emission by 40-45% by 2020, compared with 2005.In 2005, the total discharge of CO 2 was 5.59 billion tonnes, GDP was 18308.5 billion yuan, the emission of CO 2 of 10000yuan GDP and emitted by fossil fuel were 3.053 tonnes and 2.764 tonnes.According to the forecast of EIA, Wei Y. M (2008), the GDP in 2020 will reach 65845.7, 57288.4, 49745.3 billion yuan (Based on the price of 2005) under the growth of economic of high, middle, low (Table 1).
From Table 2, if the emission intensity of carbon remain unchanged until 2020, the emission of CO 2 by combustion of fossil fuel are 18.26, 15.95, 13.79 billion tonnes under three situations.To achieve the goal of reducing 40%-45%, the amount of reduction of emission are 7. 28-8.19, 6.38-7.18, 5.49-6.18 billion tonnes separately.

MODEL DESCRIPTION AND DATA SOURCES
The basic structure of the energy-environmenteconomic model is on the basis of model of Lofgren et al. (2002), added energy and made it dynamic in the plate of technology of production., energy embedded in the model as: substitution between energy firstly, then energy substitute for capital, lastly energy substitute for labor, the relation of substitution are described by the function of constant elasticity of substitution.
The basic data of the model are the social accounting matrix table in 2007 established through data of input-output table in 2007 and corresponding customs, tax revenue, international payments and flow of funds in 2007.
There are 39 industries, 2 groups of household (including urban and rural), 3 factors of production (labor, capital and energy) are set in the model.
The benchmark circumstance are set as; the growth rate of GDP in 2007~2009 is the real value, 8% in 2010, the annual average 7.5% between 2011~2015 and the annual average 6.5% between 2016~2020.

RESULTS AND DISCUSSION
In this study, the carbon tax is aimed at emission of CO 2 , the time of carrying out is 2013 and carbon tax is imposed both in industries of using the fossil fuel and the industries of producing the fossil fuel.According to international experience of carbon tax, considering different tax rate of carbon tax and different usage of income of carbon tax, six scenarios are designed as Table 3.
• The results of simulation of different tax rate and the income of tax belongs to government totally: o The result of reduction of emission under different tax rates: With the increase of tax rate, the more obvious of the reduction of emissions.If the income of tax belongs to government totally, the emission of CO 2 are 10.8, 10.24, 9.75 billion tonnes separately under three situations, comparing the benchmark, the amount of reduction are 0.64, 1.2, 1.69 billion tonnes, the rate of reduction are 5.6, 10.5,14.7%,respectively (Fig. 1).
From the simulation of three different tax rates, on the basis of development of low carbon technology and structural transition of energy, when the tax rate is 60 yuan/tonne, it probably promises to achieve the goal of carbon intensity of emission in 2020.
o The effect on growth of economic under different tax rates: In general, carbon taxation has little effect on GDP, from Fig. 2, in the beginning of the period; it has the greatest influence, but becomes less and less with time.Compared with the benchmark, under high, medium and low tax rate, the loss rate of GDP would be 0.09%, 0.2% and 0.33% in 2013, 0.04%, 0.1% and 0.18% in 2020 separately (Fig. 2); the consumption of the government will increase 1.86%, 3.53% and5.02% in 2013, 1.85%, 3.49% and 4.97% in 2020 (Fig. 3); carbon tax put a burden on residents, so the consumption of resident decrease, the ratio of reduction would be 0.49%, 0.95% and 1.39% in 2013, 0.38%, 0.74% and 1.07% in 2020 (Fig. 4).It has a relative great negative influence on the resident's income, from Fig. 5, in the beginning of the period, it has the greatest influence, but becomes less and less with time, the falling ratio of income would be 0.45%, 0.83% and 1.42% in 2013, 0.39%, 0.65% and 0.95% in 2020.

• The results of simulation of different usage of income of carbon tax o The result of reduction of emission under different usages of income of carbon tax:
There are four different usages of income of carbon tax established as s2a, s2b, s2c, s2d (Table 3), the simulation shows that the amount of reduction of emission are 1.20, 1.04, 1.2 and 1.04 billion tonnes separately in these four situations, the rate of reduction are 10.45, 9.12, 10.5 and 9.12% in these four situations, the rate of energy conservation are7.5, 6.33, 7.52 and 6.3% in 2020, respectively.From the results, the situation s2b and s2d effect the reduction in some degree.o The effect on growth of economic under different usage of income of carbon tax: In general, different usages of carbon taxation has little effect on GDP.In the beginning, it has the greatest influence, but becomes less and less with time.Compared with the benchmark, the loss rate of GDP would be 0.14%, 0.02% in 2013 and 2020 in situation s2b, 0.25% and 0.2% in 2013 and 2020 in situation s2c (Fig. 6).Considering the tax, when government owns half, key industries own another, it has little negative effect to the GDP, in s2a and s2b, it has great negative influence on the income of the resident, but in s2c and s2d, the income will increase in some degree (Fig. 7).

CONCLUSION
Carbon tax is one the most important method to achieve the goal of carbon reduction, to understand the influence of reduction of emission and economic development under different carbon taxation and different usages of income of carbon tax, a energyenvironment-economic model based on dynamic CGE model is constructed, 6 different situations are developed, when the tax rate is 60 yuan/tonne, it probably promises to achieve the goal of carbon intensity of emission in 2020.Considering different usages of income of carbon tax, four scenarios are set, through the simulation, carbon tax has little influence on GDP, and resident's incomes have change with different situations.But it brings heavy pressure and burdens to industries of energy, when putting into practice, it may encounter great resistance and difficulties which hard to implement.

Fig. 1 :
Fig. 1: The rate of reduction of CO 2 under different tax rate

Fig. 4 :
Fig. 4: The change rate of consumption of residents under different tax rate

Fig. 7 :
Fig. 7: The change rate of income of residents under different usages of income of carbon tax

Table 3 :
Design of six scenarios of carbon tax