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The environmental benefits and economic impacts of Fit-in-Tariff in China

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  • Wei, Weixian
  • Zhao, Yurong
  • Wang, Jianlin
  • Song, Malin

Abstract

We employ a dynamic computable general equilibrium (CGE) model that includes Fit-in-Tariff, greenhouse gas (GHG), and air pollutants modules to evaluate the impacts of different subsidy scenarios. Assuming that the subsidies will continue until 2030, our results indicate that the Fit-in-Tariff will have positive effects on real GDP, employment, and emission reductions and that these benefits will increase over time. Such subsidies not only encourage the substitution of clean energy for traditional fossil energy, but also invite investment in renewable energy industries, ultimately benefiting all sectors. A sustained higher subsidy rate can contribute to the abatement of GHGs, and air pollutant emissions significantly, while also stimulating real GDP and employment in the early periods of the policy, yet it will not be conducive to growth over time due to the increasing tax burden. If subsidies continue until 2050, the environmental benefits will become more pronounced while the economic benefits will gradually disappear.

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  • Wei, Weixian & Zhao, Yurong & Wang, Jianlin & Song, Malin, 2019. "The environmental benefits and economic impacts of Fit-in-Tariff in China," Renewable Energy, Elsevier, vol. 133(C), pages 401-410.
    • Handle: RePEc:eee:renene:v:133:y:2019:i:c:p:401-410
    DOI: 10.1016/j.renene.2018.10.064
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    3. Li, Lili & Taeihagh, Araz, 2020. "An in-depth analysis of the evolution of the policy mix for the sustainable energy transition in China from 1981 to 2020," Applied Energy, Elsevier, vol. 263(C).
    4. Dafermos, Yannis & Nikolaidi, Maria, 2022. "Assessing climate policies: an ecological stock–flow consistent perspective," Greenwich Papers in Political Economy 38039, University of Greenwich, Greenwich Political Economy Research Centre.
    5. Yannis Dafermos & Maria Nikolaidi, 2019. "Fiscal policy and ecological sustainability," FMM Working Paper 52-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Wang, Yao & Lin, Boqiang & Li, Minyang, 2021. "Is household electricity saving a virtuous circle? A case study of the first-tier cities in China," Applied Energy, Elsevier, vol. 285(C).
    7. Wang, Yao & Lin, Boqiang, 2022. "Can energy poverty be alleviated by targeting the low income? Constructing a multidimensional energy poverty index in China," Applied Energy, Elsevier, vol. 321(C).
    8. Jiang, Shiqi & Lin, Xinyue & Qi, Lingli & Zhang, Yongqiang & Sharp, Basil, 2022. "The macro-economic and CO2 emissions impacts of COVID-19 and recovery policies in China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 981-996.
    9. Du, Yimeng & Takeuchi, Kenji, 2020. "Does a small difference make a difference? Impact of feed-in tariff on renewable power generation in China," Energy Economics, Elsevier, vol. 87(C).
    10. Yuhuan Sun & Juntao Du & Shuhong Wang, 2020. "Environmental regulations, enterprise productivity, and green technological progress: large-scale data analysis in China," Annals of Operations Research, Springer, vol. 290(1), pages 369-384, July.
    11. Li, Hong Xian & Zhang, Yitao & Li, Yan & Huang, Jiaxin & Costin, Glenn & Zhang, Peng, 2021. "Exploring payback-year based feed-in tariff mechanisms in Australia," Energy Policy, Elsevier, vol. 150(C).
    12. Liu, Chang & Liu, Linlin & Zhang, Dayong & Fu, Jiasha, 2021. "How does the capital market respond to policy shocks? Evidence from listed solar photovoltaic companies in China," Energy Policy, Elsevier, vol. 151(C).
    13. Jiang, Hong-Dian & Liu, Li-Jing & Dong, Kangyin & Fu, Yu-Wei, 2022. "How will sectoral coverage in the carbon trading system affect the total oil consumption in China? A CGE-based analysis," Energy Economics, Elsevier, vol. 110(C).
    14. Lin, Boqiang & Chen, Xing, 2020. "How technological progress affects input substitution and energy efficiency in China: A case of the non-ferrous metals industry," Energy, Elsevier, vol. 206(C).

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