Theory and Impact
- Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Soocheol Lee, Kazuhiro Ueta, Janet E. Milne and Hope Ashiabor
Chapter 13: Abatement of emissions for a sustainable future: revisiting the carbon tax in China
Prior to the Copenhagen Conference in 2009, China had announced its voluntary national target to reduce carbon intensity, measured by CO2 emissions per unit of gross domestic product (GDP), by 40–45 per cent by the year 2020 compared with the 2005 level. The 12th Five-Year Plan for Social and Economic Development (2011–2015) (12th FYP) sets the domestically binding target of a 17 per cent cut of carbon intensity by 2015 as compared to the 2010 level. Also in 2009, France proposed a carbon tariff imposed at EU borders on imports from countries not subject to greenhouse gas (GHG) emissions control (mainly emerging economies of China, India and Brazil). The US House of Representatives passed the American Clean Energy and Security Act in the same year to apply border tax adjustments (BTA) against imports of carbon-intensive products effective from 2020. Although the French proposal was not adopted by the EU for fear of the outbreak of a trade war, and the US Bill was defeated in the Senate, the idea of carbon pricing and border adjustments continue to be on the agenda of China’s major trading partners. There is immense pressure on China, the world’s largest CO2 emitter, to take immediate actions to curb fast-growing carbon emissions. Carbon tax is seen as a potentially effective market mechanism to supplement the conventional command-and-control approach to abatement of emissions in China and perhaps a workable solution to counteract potential BTA proposed by developed countries.
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