A study on the design of a hybrid policy for carbon abatement
Published:2016-08-18 Visits:
 

Abstract:

An necessary way to mitigate the global warming is carbon reduction, which the international community is now actively promoting.China has committed a target of carbon reduction to the international society, and has devoting a great effort in the research of the related policies.Carbon taxation and carbon trading are the two main mechanisms to advocate carbon abatement, which many countries has been using.Each of these two mechanisms possesses advantages and disadvantages, and an appropriate combination of them can make best use of their advantages and bypass their disadvantages, and hence create a superior mechanism.In our opinion, the main differences between these two mechanisms include that carbon taxation has a lower institution cost (consisting of the related infrastructural investment and the regulation cost, etc), and is easier to operate, but lacks the flexibility in response to the variation of market conditions;on the other hand, however, this flexibility is just the origin of risk, which increases the difficulty for firms in their decision of carbon abatement, and in addition, is an indirect way to incent carbon abatement, comparing with carbon trading, which has a more direct effect in carbon reduction.Based on the above observation, we present a hybrid mechanism of carbon abatement, which is an organized combination of carbon taxation and carbon trading.It consists of two parts: one is the carbon taxation, which has a progressive tax rate and the other is the carbon trading.For the small firms, they pay the carbon tax only.For the large firms, first of all, they need to get the initial carbon emission quotas by some way, and then, trade it in the carbon market in case of necessary.For firms with extra emissions, they will get punishment according to a high carbon tax rate.This hybrid policy considers the equity between different firms in carbon emission rights, and the efficiency of the mechanism as well, and decreases the risk level for firms in the carbon emission decision.This is just what the superiority of the hybrid policy is in.We also analyze the feasibility of this hybrid policy in China, and propose some important issues in the implementation of this hybrid policy in China and present the relevant suggestions.The discussion in this paper can serve as a reference to the government in the decision of carbon policies.

 

Fund:

Major projects of the National Social Science Fund of China “Intensive, Intelligent, Green, Low-Carbon New Urbanization Road Study” (Approval No.: 13 & ZD026);

 

Key words

carbon tax; carbon trading; hybrid policy

 

Reference

Zhang, B., Liu, Q., & Pan, H. (2016). A study on the design of a hybrid policy for carbon abatement. China Population, Resource and Environment, 26(12), pp.39-45.(《混合碳减排制度设计研究》)

 

Link

http://kns.cnki.net/KCMS/detail/detail.aspx?dbcode=CJFQ&dbname=CJFDLAST2017&filename=ZGRZ201612006&uid=WEEvREcwSlJHSldRa1Fhb09jSnZnUzRDeEVmZDZnNlhzb0xBL0duVGdjRT0=$9A4hF_YAuvQ5obgVAqNKPCYcEjKensW4IQMovwHtwkF4VYPoHbKxJw!!&v=MDczODc0SDlmTnJZOUZZb1I4ZVgxTHV4WVM3RGgxVDNxVHJXTTFGckNVUkxLZmIrUnRGeXJoVUx2TFB5clpkTEc=

 

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