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To cope with global warming, China has promulgated Enhanced actions on climate change : China ’ s intended nationally determined contributions and will start the national carbon emissions trading market in 2017. Carbon emissions are distributed by the form of free quota and paid quota. However, few literatures have focused on how the economy and the environment would be changed by the change of free quota ratio. This paper establishes the 10 scenarios of different free quota ratio of carbon emissions rights and uses a dynamic, recursive computable general equilibrium (CGE) model to simulate the carbon emissions trading market, to explore the relationship between free quota ratio and carbon trading price, and the impact of carbon trading scheme (ETS) on China’s economy and environment. The results show that free quota ratio will not have a direct impact on gross domestic product (GDP) and other economic and environment indicators but carbon trading prices. The prices and the rate of free payment in the current pilot cities in China are still relatively conservative. It is possible to reach emission peak, 8.21 billion ton, in 2025 and accumulative CO 2 reduction from 2017 to 2030 is 20.02 billion tons, or 59.60% of 2010 world’s total CO 2 emission. Cement, minerals, electricity and nonferrous metals under ETS will suffer great losses, so subsidy should be considered. Finally, we suggested that China should reduce the total carbon rights to increase the carbon price in 2017, and gradually reducing the proportion of free quota, from 90% in 2017 to 50% or less in 2030, by which the peak year of CO 2 emission can meet in 2025. We also suggest that ETS is an effective strategy for CO 2 reduction and the ratio should be gradually reduced in ETS to prevent violent fluctuation of carbon price in China. [ABSTRACT FROM AUTHOR]

As the threat of global climate change grows increasingly dire, we are faced with the challenge of reducing carbon dioxide (CO2) (the leading greenhouse gas) emissions to the atmosphere. There is much debate about what are the most effective strategies for meeting this challenge. In this debate, one prominent question centers on whether reducing the carbon intensity of the economy (CO2 emissions per dollar of gross domestic product) will help reduce total CO2 emissions. Some argue that improvements in the carbon efficiency of the economy will allow us to reduce CO2 emissions even in the face of economic growth. Others suggest that improving carbon efficiency may not only be insufficient to counter the effects of economic growth, it may actually spur the expansion of production and consumption, and thereby lead to an escalation of CO2 emissions. Here, I address this issue by examining trends in carbon intensity and total CO2 emissions in the world as a whole and in the five nations that emit the most CO2: China, the United States, Russia, India, and Japan. I find that in recent years the carbon intensity of the world as a whole and in these major emitters has generally declined (i.e., carbon efficiency has improved), yet total emissions have generally risen. This suggests that improving efficiency is unlikely to reduce total CO2 emissions. Therefore, in order to reduce CO2 emissions it will likely be necessary to challenge the growth ideology common to the modern era and shift societies to economic systems that are not dependent on growth. [ABSTRACT FROM AUTHOR]