Distributional impact of carbon pricing in Chinese provinces

Wang, Q., Hubacek, K., Feng, K., Guo, L., Zhang, K., Xue, J., & Liang, Q.-M. (2019). Distributional impact of carbon pricing in Chinese provinces. Energy Economics 81 327-340. 10.1016/j.eneco.2019.04.003.

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Abstract

Based on a Multi-Regional Input-Output (MRIO) model, and combined with the 2012 MRIO table for 30 Chinese provinces, this paper analyzes the distributional impacts of carbon pricing on households within and across Chinese provinces. The results show regressive distributional effects of carbon pricing across provinces, i.e. poor provinces are affected more by the price. Carbon pricing also shows rural-urban regressivity (i.e. rural households are impacted more heavily than urban households) in more than half of the provinces. Within each selected province, carbon pricing has mostly regressive effects, i.e. poorer households groups are affected more than richer groups for urban households in all provinces and for rural houeholds in one third of the provinces. When looking more specifically at direct energy consumption, we find that the carbon pricing on domestic fuels generally shows regressivity, while pricing carbon on transport fuels shows progressivity. In addition, the impact of carbon pricing on residence (mainly on electricity and coal) is the most important contributor to the regional regressivity across provinces.

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