The impact of environmental protection tax on sectoral and spatial distribution of air pollution emissions in China

Abstract

Environmental problems, associated with climate change and air pollution, have become increasingly serious for China in recent years, which have aroused great domestic and international concerns. To mitigate these problems with great efforts, the Chinese government has implemented the Environmental Protection Tax Law in the whole country since the beginning of 2018. Although the new tax law is perceived as an aggressive policy that tends to establish a taxation system for promoting air pollution control, evaluations of its effectiveness are insufficient and urgently needed for China. Using a multiregion multisector Computable General Equilibrium model, we, for the first time, quantify the impacts of this 'pollution tax' policy on modulating air pollutants emissions. Our analysis shows that current tax policy is generally able to reduce many short-lived air pollutants emissions (e.g. SO 2 , NO X , TSP, PM 10 , PM 2.5 , CO, VOCs, OC, NH 3 and BC), but the significant effects only happen in regions with large economic scale (i.e. Guangdong, Shandong and Zhejiang provinces) and in sectors with high emission intensity (i.e. the electric power and nonmetal manufacturing sectors). However, at the national level, the overall effect of the current policy on air pollution mitigation is relatively small, less than 2% compared to a business-as-usual scenario. Large emission reduction potentials exist if the tax increases. Therefore, a more ambitious tax policy is urgently needed in order to achieve China's air pollution mitigation target of 2020. We also find that in China for implementing any pollution tax policies, the rate of decline in CO 2 emissions is much larger than those of short-lived pollutants, which indicates a huge co-benefit on global climate change mitigation.

Impacts of Potential China's Environmental Protection Tax Reforms on Provincial Air Pollution Emissions and Economy

“…The elasticities of the model are shown in Tables S3 and S4. The simulation of the baseline has been shown in Hu et al (), and the national GDP, provincial GDP, and industrial structures are all consistent with the national statistics.…”

“…This CGE model is designed to assess the impacts of energy and climate policies on different provinces and sectors. A detailed algebraic description of the model and the relative parameters are provided in Hu et al (). In this study, we expand the previous CGE model to include different tax revenue returning methods, and here, we present a brief overview of the model.…”

“…It is accounted by the multiplying of air pollutant emissions values (kg) and the reciprocal of the pollution equivalents (kg/kg). The provincial and sectoral air pollutants emissions values are calculated based on the PKU‐Inventory and energy consumption data, which has been applied and validated in our previous study (Hu et al, ). And the pollution equivalents for each air pollutant are shown in Table S6.…”

A Joint Control Model Based on Emission Rights Futures Trading for Regional Air Pollution That Accounts for the Impacts on Employment

“…For example, Zhou et al [30] found that the implementation of emission trading, especially carbon emission trading, can effectively reduce carbon dioxide emission and improve environmental quality. Other studies have proposed measures such as air pollution charges [6], green credits [31], and environmental protection tax [7]. However, most research has not considered a combination of emission rights and futures, options, or other financial instruments.…”

“…Various countries take different measures to control air pollution; they include direct control, environment protection tax [6,7], emission trading [8][9][10], and environmental protection technologies such as recycling and reuse [11,12]. Of these options, air pollution control based on emission rights trading has attracted more attention [13,14].…”