The Choice of Carbon Reduction Policy in the Post-covid-19 Era: A Case Study of Zhejiang Province

Numerous nations face challenges in implementing effective governance measures and striking a balance between environmental protection and socio-economic progress. Particularly in the Post-Covid-19 Era. Both administrative and market-based policies have their advantages and disadvantages, but limited research has been conducted on the impact of similarities and differences in China. To address this, we focused on Zhejiang Province and develops a dynamic Computable General Equilibrium (CGE) model to evaluate the potential outcomes of the carbon emission constraint policy and carbon taxes policy on the environment, economy, and society. Based on model assumptions, the results show that Zhejiang Province is expected to reach its carbon peak in 2026 as planned, with an estimated peak of 448.15 Mt. However, we must be aware of the unintended socio-economic consequences that may arise from carbon reduction, despite its significant benefits. Compared to the carbon emission restriction strategy, the implementation of the carbon tax results in higher total economic costs. For example, the economy gradually contracts and causing a rise in the price index. Meanwhile, the carbon tax rate also increases progressively, starting at 1.46 yuan/ton in 2021 and reaching 58.73 yuan/ton during the aggressive phase of carbon emission reduction. In addition, the structural impact of the carbon tax policy on industries sectors is more targeted, with high energy-consuming and high-polluting industries being negatively affected, while cleaner industries are more moderately affected. Overall, this study contributes to the development of more precise, integrated, and sustainable policies to address climate change.