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Impact of Carbon Tax and CO2 Abatement on Chinese Economy: A Static CGE Analysis

1.Background of the Problem The global climatic warm-up is a common challenge facing mankind, and also one of the global ecological crises most concerned by mankind. Such concern has been fully reflected in the Framework Convention on Climatic Changes (FCCC) signed by more than 150 countries, and several negotiations afterwards. Meantime, in view of the ambiguity in the statements of the framework convention on key problems, and the intensive quarrels emerged in later negotiations, it could be also seen that genuine cooperation among mankind across national boundaries is very difficult. How to reduce the discharge of greenhouse gases is the central problem facing the FCCC. Carbon dioxide produced by combustion of fossil fuels is the principal contributor of incremental greenhouse gases (the proportional relation among the main hothouse gases in relation to their cumulative greenhouse effects are shown in Illustration 1.1), so the allocation of its reduction of discharge has become the focus of negotiations about FCCC fulfillment.