Social Sciences in China (Chinese Edition)

No.1, 2016

The Mechanism and Effects of Allocation of Emission Rights on the Condition of Endogenous Growth

(Abstract)

Tang Weiqi, Qian Haoqi and Wu Libo

China is in the course of economic transformation, and the growth path and technological progress path vary greatly in terms of different regions and industries. The designing of climate policies, especially the allocation method of carbon emission rights, not only determines the emission reduction effects of policies, but exercises permanent influence on the path of long-term economic growth. As the model of a general equilibrium shows, different allocation mechanisms of carbon emission rights exert different influences upon short- and long-term economic outputs. As it is shown by a policy simulation based on the model of general equilibrium of multi-regional dynamics in China, a static allocation mechanism of emission rights cannot reach the optimization goal of intertemporal economic outputs. As a substitute, dynamically adjusting the allocation of emission rights in accordance to the output of producers, which is an optimization mechanism, can inspire a “learning-by-doing” effect, increase short-term economic output, and be used as an important reference for the policy designing concerning the energy saving and emission reduction and growth effects in various areas and industries, but its effect on long-term economic growth is still limited.