Abstract: We use the Chinese multi-regional general equilibrium model (TermCo2) to simulate the economic impact of the separate carbon trading of Guangdong and Hubei and inter-provincial carbon trading. The study found that carbon trading can reduce the carbon abatement costs of the entire region. In the separate emission reduction, the carbon tax of Guangdong and Hubei are respectively 102.9 yuan/ton and 14.8 yuan/ton, the average cost of regional emission reduction is 972.4 yuan/ton. After the inter-provincial carbon trading, the regional carbon tax is only 35.9 yuan/ton, the average cost of regional emission reduction goes down to 567.9 yuan/ton. From the view of industry emission reduction, the main reason for emission reduction is the falling of output in high emission industry, the role of substitution in energy products with different emission intensity is not big. From a macroeconomic view, the carbon market will pull down the economic growth, curb excessive investment growth and make a slight push of prices. Although the GDP of Hubei (the seller of emission rights) suffers a bigger loss, its welfare has been improved. From the industry point of view, electricity, non-metallic mineral products, non-metallic mining and dressing industry, metal smelting and rolling processing and the chemical industry sectors with high emission intensity will suffer a larger impact, services and other tertiary industry suffer less impact. Finally, we put forward the main conclusions and policy recommendations.
Keywords：Carbon Market, Economic Effect, Multi-Regional CGE Model, TermCo2
source:Finance & Trade Economics ,No11,2013