A Multi-regional CGE Model and Its Application in Low Carbon Policy Simulation in China

A multi-regional computable general equilibrium (CGE) model including a low carbon policy module is developed. Many important low carbon policy issues are incorporated in the model such as carbon permit initial allocations, with or without trading among regions, carbon trading pilots, nationwide carbon markets, carbon taxes and so on. Influences on industrial development, regional economic development, carbon emissions, and carbon market can be simulated. As far as what policies should be exerted to realize the 2020 carbon mitigation target in china is concerned, the results of this paper suggest a mixed policy combining a cap-and-trade scheme with a low carbon tax is the first choice.