Energ. Econ. http://doi.org/hqv (2012)

Credit: © ISTOCKPHOTO/THINKSTOCK

Since 2007, the Chinese government has introduced restrictions — such as export taxes and quotas — in energy-intensive sectors as part of its low-carbon development strategy. This approach, however, has failed to generate an explicit carbon price and signal abroad China's political will to tackle climate change.

Ji Feng Li from the State Information Centre of China, Beijing, and colleagues analysed the economic rationale of directly taxing the carbon dioxide emissions of Chinese exports. In their model, they set the export carbon tax at 200 Yuan per tonne of carbon dioxide and analysed the associated effects. They found that the tax is likely to decrease the export of energy-intensive products with, for example, ferrous metal down by more than 8% and chemicals by 3.3%. In terms of the carbon emissions generated directly by exports, they estimated an overall cut of 3.77%.

The researchers also analysed the economic viability of the export tax. They found that in terms of increasing consumption levels and limiting losses in investment and gross domestic product, the best strategy is to earmark the fiscal revenues from the tax to stimulate consumption.