Achieving Environmental Sustainability through Fiscal Policy
Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne
Chapter 1: Greening the Dragon: Energy Tax Policy in China
Walter Wang INTRODUCTION Due to the tremendous growth China has experienced in recent years, China surpassed the United States in 2009 as the world’s largest energy consumer.1 In 2006, coal accounted for 70 per cent of the total energy consumption in China.2 China’s energy demand continues to grow alongside its economy. In June 2010, China consumed 8.98 million barrels of oil per day, 10 per cent higher than one year before.3 The International Energy Agency projects China’s emissions of energy-related greenhouse gases will exceed the rest of the world’s combined emissions by 2020.4 The World Bank has reported that 16 of the 20 most polluted cities in the world are in China.5 These ﬁgures support the fact that the Chinese government faces a daunting task to craft policies that address the externalities such growth has caused. China must somehow strike a balance between economic growth, urbanization, energy consumption, pollution, a rising consumer class, and the health and welfare of its citizens. Tax policy is used by many nations to drive innovation, stimulate capital investment, and alter consumer behavior. China is no different in this respect, though the magnitude of the problems the country faces may be greater than any other country in the world. This chapter will discuss the broad energy goals set forth by the Chinese government and how tax policy has supported the achievement of these goals. POLICIES DESIGNED TO PROMOTE GREEN INVESTMENT China has developed a number of general laws that support the development and implementation of...
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