The influence of carbon tax on the ecological efficiency of China's energy intensive industries-A inter-fuel and inter-factor substitution perspective

Can factor substitution reduce the shadow price of air pollution embodied in international trade? A worldwide perspective

The calculation of trade-embodied air pollution (TEAP) and its economic losses can be reasonably used to assess the impact of transboundary air pollution. However, these air pollutants, which are associated with international trade, can be easily ignored due to their concealment. Based on this, the global multiregional input‒output model (MRIO) is used to quantify the volume of five air pollutants that are embodied in the trade of 20 countries from 2000 to 2016. Then, the shadow price of trade-embodied air pollution (SPTEAP) and the elasticity of factor substitution (EFS) are both calculated by applying the translog production function. Finally, impulse response analysis is used to study the dynamic impact of EFS on the SPTEAP. The main conclusions are as follows: (1) All countries experienced a mass transfer of TEAP, among which China and the USA are the developing and developed countries with the largest amount of TEAP transfers, respectively. (2) The SPTEAP and EFS vary greatly among countries, and these values are generally higher in developed countries than in developing countries. The relationship between the three EFSs can be expressed as [Formula: see text] in all countries, thus indicating that improving the technological level of a country is the best solution for reducing the TEAP in that country while incurring the lowest cost and the least difficulty. (3) Over the long run, the increase in [Formula: see text] and [Formula: see text] reduces the SPTEAP. Conversely, an increase in [Formula: see text] increases the SPTEAP. Therefore, policymakers should weigh these three factors according to the fluctuation of the SPTEAP and constantly adjust the allocation structure and ratio of these factors to maximize the benefits of transboundary air pollution governance.

The effects of carbon pricing instruments on carbon emission reduction in China's refining industry: an evolutionary game between heterogeneous refineries

Carbon emissions from the refining industry are receiving increasing national attention. In view of long-term sustainable development, a carbon pricing mechanism oriented to carbon emission reduction needs to be developed. Currently, the two most common carbon pricing instruments are emission trading system and carbon tax. Therefore, it is important to study the carbon emission problems in the refining industry under emission trading system or carbon tax. Based on the current situation of China's refining industry, this paper constructs an evolutionary game model for backward and advanced refineries to explore which instrument is more effectively applied in the refining industry and identify the effective factors that can promote carbon emission reduction in refineries. According to the numerical results, if the heterogeneity of enterprises is small, the government's implementation of an emission trading system is the most effective measure, while carbon tax can only ensure that the equilibrium strategy solution is (1,1) when the tax rate is high. If the heterogeneity is large, the carbon tax policy will not have any effect, indicating that government implementation of an emission trading system is more effective than the carbon tax. In addition, there is a positive relationship between carbon price, carbon tax, and refineries' agreement to carbon emission reduction. Finally, consumers' preference for low-carbon products, R&D investment level, and R&D spillover effect have nothing to do with carbon emission reduction. Only by reducing refinery heterogeneity and improving the R&D efficiency of backward refineries can all enterprises agree to carbon emission reduction.

Temporal and spatial characteristics of green total factor productivity in energy-intensive industry in China

China's energy-intensive industry (EII) is characterized by high pollution, high energy consumption, and high emissions. It is essential to boost this sector's green total factor productivity (GTFP) in order to support the sustainable development of the China's economy and help to achieve the objective of carbon neutrality. This work measures the evolution of GTFP in EII and its subsectors at provincial and regional level from 2001 to 2019, identifies the causes of these changes, and finally analyzes the particular spatial aggregation effect of GTFP in EII. It is discovered that the GTFP of China's EII has significantly improved throughout the sample period and exhibits a spatial structure of "high in the coastal areas and low in the west and center." The main driver of GTFP growth for China's EII and its subsectors was technological advance. Smelting and pressing of ferrous metals (SPFM) and smelting and pressing of non-ferrous metals (SPNM) were the industries with the most significant technological progress. Remarkable spatial correlations existed among the GTFP of EII at provincial level. The GTFP values of EII in coastal regions were relatively high and tend to benefit the adjacent provinces but there was a polarization effect in the Middle Reaches of Yellow River (YR). Finally, policy implications are provided for the sustainable development of China's EII.

Environmental Regulation, Financial Pressure and Industrial Ecological Efficiency of Resource-Based Cities in China: Spatiotemporal Characteristics and Impact Mechanism

A resource-based city is a type of city characterized by the exploitation and processing of natural resources as the leading industry in the region. Such cities provide essential resources for China's economic development and support long-term rapid economic growth. However, resource-based cities (RBCs) face challenges, including resource depletion, economic recession, environmental pollution, and ecological damage, to which not enough attention has been paid. In the context of China's increased focus on environmental protection and the economy, improving industrial ecological efficiency of RBCs has become ever more important. In the present study, the Super-SBM model was used to measure the industrial ecological efficiency of 114 RBCs in China from 2003 to 2016. The results show that during the study period, the industrial ecological efficiency of RBCs in China improved significantly, particularly in the central and western regions. The results from a Tobit model show that appropriate environmental regulation and financial pressure have a positive impact on the industrial ecological efficiency of RBCs. However, when faced with the dual pressures of environmental regulation and financial difficulty, improvement in industrial ecological efficiency was inhibited. The impact of environmental regulation and financial pressure on industrial ecological efficiency of cities in different regions and development stages and with different resource types shows heterogeneity. In accordance with the study findings, differentiated measures and suggestions are proposed to improve the industrial ecological efficiency of RBCs.

How would the carbon tax on energy commodities affect consumer welfare? Evidence from China's household energy consumption system

Although carbon tax policies can effectively restrain energy consumption and reduce pollution, they will also affect the welfare of residents through a price mechanism. We explore the impact of energy price increases that are caused by possible carbon tax policies on the welfare of residents in China with a quadratic almost ideal demand system (QUAIDS) model. The estimated elasticities show that the income elasticity of coal demand is -0.741 for urban residents, compared to 0.392 for rural residents. The cross-price elasticity shows that China's residential energy consumption has moved up the clean energy ladder. Based on the above reliable elasticity estimates, the welfare effects are analyzed in the residential consumption system. The overall welfare loss for residents increases with the level of carbon tax. A carbon tax on all energy sources is a regressive policy for China, and when the carbon tax rate reaches the world average, of 30 USD/tCO₂e, the welfare loss for low-income and high-income residents is 1.55% and 0.62% respectively. However, the separate imposition of carbon taxes on different energy sources shows the heterogeneity of the welfare impacts of carbon taxes. At the national and urban levels, the distribution effects of carbon taxes are regressive for coal, LPG, and electricity, progressive for gasoline, and distributional neutral for natural gas. In rural areas, however, the welfare distribution effect of the carbon tax on diesel, LPG, and natural gas are progressive, and the welfare effects of carbon taxes on electricity show an inverted U-shaped distribution. Our findings are conducive to the development of a differentiated carbon tax policy by the Chinese government.

Changes in carbon emission performance of energy-intensive industries in China

As the major energy consumers, energy-intensive industries are the key players in achieving carbon emission reduction targets. The paper builds a super slack-based model (SBM) considering this undesirable output and calculates the carbon emission efficiency. Then, the meta-frontier Malmquist-Luenberger productivity index (MF-MLPI) is constructed to dynamically analyze the growth rate changes of the carbon emission efficiency and the regional differences in energy-intensive industries. Furthermore, the carbon emission reduction potential of the energy-intensive industries in various economic regions of China is discussed, and the conclusions are as follows: there is a big difference in the carbon emission technology gap ratios (TGRs) of the energy-intensive industries in different economic regions; the growth rate of the carbon emission efficiency of energy-intensive industries shows a trend of first declining and then slowly recovering, while the carbon reduction potential generally shows a trend of decreasing and then rising; and the carbon emission reduction potential in the eastern region keeps decreasing.

How Does the Carbon Tax Influence the Energy and Carbon Performance of China’s Mining Industry?

As the world’s largest energy consumer, China’s CO2 emissions have significantly risen, owing to its rapid economic growth. Hence, levying a carbon tax has become essential in accelerating China’s carbon neutralization process. This paper employs the two-stage translog cost function to calculate the price elasticity of the mining industry’s energy and input factors. Based on the price elasticity, the carbon tax’s influence on the mining industry’s energy and carbon performance is estimated. In the calculation of energy efficiency, the non-radial directional distance function is adopted. The results express that the carbon tax significantly decreases the mining industry’s CO2 emissions and promotes its energy and carbon performance. In addition to levying a carbon tax, the government should also strengthen the market-oriented reform of the oil and power infrastructure to optimize the mining industry’s energy structure.

Wind energy and sustainable electricity generation: evidence from Germany

Wind energy is one of the renewable energy sources that has been touted to address the challenges of energy security and environmental degradation. This is only attainable if countries with substantial wind energy potential use it in significant proportion to satisfy their energy needs. One promising sector where wind energy can be employed to actualize this potential is the electricity sector. However, the current reality is that fossil fuels still dominate the energy profiles of most economies of the world, including the advanced economies, with wind renewable energy source accounting for a very small proportion of the energy mix. Germany is one of the few countries that offers promising opportunities in deploying wind energy to its full potentials. This study therefore explores the feasibility of substituting wind energy for nuclear energy and other fossil fuels using Germany as a country of focus. We use the ridge regression procedure to analyse yearly time series data for the German power sector that spans the period 1986 to 2018. With respect to output elasticities of the energy inputs, the results reveal that wind and natural gas have positive output elasticity estimates while the estimates for nuclear and coal are negative. We also found that all the inputs pairs have positive substitution elasticity estimates between them. With respect to wind energy, the highest substitutability estimate occurred with nuclear power which is followed by natural gas and then coal. The study recommended that policies such as granting of tax credit for wind energy technology, reduction in property taxes for wind power facilities, and allocation of fund for research and development (R&D) in wind energy technology are recommended to promote the use of wind energy in the economy.

Carbon tax and energy innovation at crossroads of carbon neutrality: Designing a sustainable decarbonization policy

Decarbonation has been a primary policy prerogative for Sweden, and carbon tax has been a primary policy instrument in this pursuit, and the revenue generated out of carbon tax has been a driver for energy innovation. However, the benefits of energy innovation have not been experienced across various sectors in Swedish economy, and it might be anticipated that the potential aim of achieving carbon neutrality might not be accomplished to the fullest. Hence, being faced with the need of policy realignment for Sweden, this study has made an attempt to discover the dynamics between carbon tax revenue and energy innovation over a period of 1990-2019, following Quantile-on-Quantile Regression framework. The results obtained from the study show that the impact of carbon tax revenue on energy innovation might turn out to be ineffective beyond a certain threshold limit. A similar pattern has also been observed for the impact of energy innovation on carbon tax revenue. This study gives an indication that there might be a non-linear association between both these model parameters. The study outcomes have paved a way to design a policy framework for helping Swedish economy to attain the objectives of Sustainable Development Goals, while paving the ways to achieve carbon neutrality.

A factorial CGE model for analyzing the impacts of stepped carbon tax on Chinese economy and carbon emission

Carbon tax is a powerful incentive to mitigate carbon emissions and promote energy revolutions. It is of vital importance to systematically explore and examine the socio-economic impacts of levying a carbon tax, such that desired compromises among socio-economic and environmental objectives can be identified. In order to fill the research gap on the stepped carbon tax, this study is to develop a factorial computable general equilibrium (FCGE) model for examining the interactive effects of multiple policy options (e.g., grouping of emission intensity/level, and relevant tax rates), and supporting the formulation of desired carbon-mitigation policies. It is discovered that (1) carbon tax of 18.37 to 38.25 Yuan/ton is a reasonable policy alternative for China; (2) the stepped carbon tax (high level on coal-related fuels) is more efficiency than conventional carbon tax policy; (3) the positive effects for reducing carbon emission intensity can be strengthened with an increasing step range; (4) interactive effects between stepped carbon taxes on coal-related energies and crude oil related energies should be jointly considered by the policy makers.

Illuminating the efficiency of CO2 emissions in China's mining sector: evidence from meta-frontier Malmquist index models

CO₂ emission reduction has become a binding target in China's economic and social development. The mining industry is China's primary energy consumer and therefore has an important influence on China's CO₂ emissions. Herein, we conduct a comprehensive analysis of data from the Chinese mining industry between 2004 and 2015. And we employ meta-frontier data envelopment analysis to analyse the CO₂ emission efficiency of the Chinese mining industry and identify the driving factors that influence the observed dynamic changes in CO₂ emission efficiency. The main practical conclusions of our research are as follows: (1) the CO₂ emission efficiency of China's mining industry had grown continuously during the study period; (2) during the study period, the CO₂ emission efficiency of China's mining industry did not change consistently with changes in different geographical regions; (3) the overall efficiency of management in China's mining sector was low; (4) the small and medium enterprises (SMEs) in China's mining sector played a significant role in the improvement of the CO₂ emission efficiency. The empirical results provide constructive policy implications that should be considered by the policy makers for the more sustainable development of China's mining sector.

Financial implications of fourth industrial revolution: Can bitcoin improve prospects of energy investment?

Bitcoin and the blockchain technology on which it is based are the key drivers behind the accelerated pace of Fourth Industrial Revolution in the domain of Finance. The offshoots of this technology however are not limited and are rapidly spreading in other domains such as oil market. This paper investigates the causality or influences that both markets, Bitcoin price (BP) and oil price (OP) have on each other by applying the bootstrap Granger causal relationship tests considering full as well as sub-samples. Our analysis reveals that shocks originated in OP and transmitted towards BP can be both positive or negative. The positive impact indicates that Bitcoin can be viewed as an asset helpful in avoiding the risks of the high OP, which also indicates that Bitcoin and oil are in the same boat, however, the negative effects cannot support this view. The negative influence of OP on BP can be explained by the burst of the Bitcoin bubble which has weakened its hedging ability. In turn, there is also a negative influence or reverse causality running from BP to OP, highlighting that the demand for oil by investors can be threatened by the increasing BP. Keeping in view the more integrated and complexed financial dynamics which are the results of Fourth Industrial Revolution, investors can benefit from this interrelationship to diversify the risks and optimize their investment by building a more balanced portfolio. Also, governments could promote and protect the healthy development of the Bitcoin and energy market by preventing the Bitcoin bubbles and understanding the reasons of oil price volatility.

Planning electric power system under carbon-price mechanism considering multiple uncertainties - A case study of Tianjin

The carbon-price mechanism has been proved to be an effective measure for promoting energy revolution and mitigating climate change. It is of vital importance to develop optimal energy development strategy for electric power-dependent regions by considering the complex interaction among carbon price, carbon emission control, and carbon-responsibility transfer. In order to fill the research gap on the optimal choice of carbon-price mechanism at the urban level, this study is the first attempt to express uncertainties embodied in the carbon price mechanism as interval values, probability distribution and downside risks. The developed risk-aversion-based interval two-stage stochastic programming (RITSP) model is effective in analyzing the effect of internal and electric-transmission related carbon-tax on power system structure. It is discovered that carbon compensation policy for imported electricity is more suitable for Tianjin's power system development. Tianjin would primarily purchase electricity from Inner-Mongolia. With the increase of carbon emission tax, Tianjin would import increasing proportion of electricity from Gansu. Due to the limited endowment of renewable energy in Tianjin, the impact of carbon emission limitations on the renewable energy power generation structure of is trivial, and it has a greater impact on stimulating the development of CCS technology. What's more, Tianjin's future power system planning is more inclined to develop CCS rather than renewable energy.

Impacts of Investment Cost, Energy Prices and Carbon Tax on Promoting the Combined Cooling, Heating and Power (CCHP) System of an Amusement Park Resort in Shanghai

Poor economic performance has limited the diffusion of the combined cooling, heating, and power (CCHP) system. Various factors influence the economic performance of the CCHP system. To analyze the impacts of these different factors and promote the CCHP system, this study evaluated its comprehensive performance through a multi-criteria method, using an amusement park resort in Shanghai as a research case. First, three CCHP systems with different penetration rates were presented and simulated in a transient simulation model for comparison. The economic and environmental performance of these different penetration CCHP systems were evaluated based on the dynamic payback period and carbon dioxide emissions. The impacts of investment cost, energy prices, investment subsidy and a carbon tax on the economic performance of the three systems were discussed, and a sensitivity analysis was used to compare these factors. The results show that the current subsidy can reduce the economic gap between the CCHP system and the conventional system, but it still needs to be increased by 1.71 times to achieve market competitiveness of the CCHP system with 100% penetration under the current investment cost and energy prices. In addition, the introduction of a carbon tax could accelerate the promotion of the CCHP system. When the carbon tax reaches 25 $/ton, the CCHP system becomes the best choice of energy supply system.