Climate Mitigation in China: Which Policies are Most Effective?

72 Pages Posted: 9 Dec 2016

See all articles by Ian Parry

Ian Parry

International Monetary Fund (IMF)

Baoping Shang

International Monetary Fund (IMF) - Fiscal Affairs Department

Philippe Wingender

International Monetary Fund (IMF) - Fiscal Affairs Department

Nate Vernon

Independent

Tarun Narasimhan

International Monetary Fund (IMF)

Date Written: July 2016

Abstract

For the 2015 Paris Agreement on climate change, China pledged to reduce the carbon dioxide (CO2) intensity of GDP by 60-65 percent below 2005 levels by 2030. This paper develops a practical spreadsheet tool for evaluating a wide range of national level fiscal and regulatory policy options for reducing CO2 emissions in China in terms of their impacts on emissions, revenue, premature deaths from local air pollution, household and industry groups, and overall economic welfare. By far, carbon and coal taxes are the most effective policies for meeting environmental and fiscal objectives as they comprehensively cover emissions and have the largest tax base.

Keywords: Climatic changes, China, Greenhouse gas emissions, Trading systems, Fiscal policy, Climate policy, Paris Agreement, carbon tax, China, air pollution, coal tax, emissions trading, incidence, welfare effects

JEL Classification: Q48, Q54, Q58, H23

Suggested Citation

Parry, Ian and Shang, Baoping and Wingender, Philippe and Vernon, Nate and Narasimhan, Tarun, Climate Mitigation in China: Which Policies are Most Effective? (July 2016). IMF Working Paper No. 16/148. Available at SSRN: https://ssrn.com/abstract=2882584

Ian Parry (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Baoping Shang

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Philippe Wingender

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States
202-623-9831 (Phone)
202-623-4199 (Fax)

Nate Vernon

Independent ( email )

No Address Available

Tarun Narasimhan

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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