Search

Recycling carbon tax revenue is a significant part of the design of a nation's carbon tax system. The impact of different recycling principles on the socio-economy and carbon emission reduction varies greatly. Under the background of China's goal of reaching peak carbon emissions, this paper designed three carbon tax recycling principles based on the goal of Nationally Determined Contributions (NDCs), including recycling principles based on output ratio, export ratio, and carbon intensity. A recursively dynamic CGE model was developed in this study to evaluate the economic effects of these three carbon tax recycling principles based on tax neutrality under China's goal of reaching peak carbon emissions. Carbon tax recycling measures could mitigate the economic losses caused by carbon tax, and the results could be greatly affected according to different recycling principles. The results showed that: 1 The recycling principle based on output ratio could reduce economic losses and improve households' social welfare. 2 China's carbon intensity in 2030 could be reduced by more than 65% compared with that in 2005, and the proportion of non-fossil energy in primary energy consumption could reach 25% using the recycling principle based on carbon intensity, but the economic loss mitigation effect of the recycling measures based on this principle was small. 3 Adopting the recycling principle based on export ratio would narrow the competitive gap between China and foreign countries, and the exports of high-carbon-intensity goods would not increase under this principle. 4 According to principles based on output ratio and export ratio, the NDC goal of non-fossil energy accounting for about 25% of primary energy consumption by 2030 could not be achieved, and only the NDC goal of reducing carbon emissions per unit of GDP by more than 65% compared with that of 2005 could be achieved. In brief, as an essential policy tool to achieve China's goal of reaching peak carbon emissions, the carbon tax should be implemented as soon as possible. At the same time, according to China's national conditions, a targeted choice of carbon tax recycling principle is needed. The role of the carbon tax in the process of achieving the goal of Nationally Determined Contributions should be fully utilized. [ABSTRACT FROM AUTHOR]