Environmental tax and SO2 and NOx emissions-a sector level decomposition analysis

Based on environmental CGE model, the SO2 and NOx emissions reduction of sectors were decomposed into output scale effect, process emission effect, intermediate input substitution effect, energy substitution effect (emissions intensity effect and emissions base effect), and import substitution effect. It was showed by analytical results that SO2 and NOx emissions were decreased by 290 000 tons and 130 000 tons, respectively, in which, the reduction of coal use as intermediate inputs accounted for 57% and 99%, respectively. Besides, it was showed by our decomposition analysis that energy substitution effects made the strongest contribution, SO2 and NOx emissions were reduced by 270 000 tons and 120 000 tons, respectively. This was followed by output scale effects, contributing 20 000 tons and 8579 tons of emissions cut, respectively. On the sector level, the largest emissions reduction was contributed by the electric power sector, to which energy substitution effects made the greatest contribution. The main factors for SO2 and NOx emissions reduction varied significantly across sectors. Therefore, when levying environmental tax, sectors' idiosyncrasies in reducing SO2 and NOx emissions should be considered by the government. © 2017, Editorial Board of China Environmental Science. All right reserved.