Reversing climate policy stereotypes: Evidence from an energy-dependent region and China's major economic circles

Abstract

Achieving decarbonization and industrial transformation in typical energy-dependent regions is a crucial step in mitigating regional climate change. This study constructed a factorial carbon policy equilibrium effect model (FCEE) that integrated input–output analysis, a computable general equilibrium model, factorial analysis, multi-regional input–output, and ecological network analysis. This work explored the internal impact of a composite carbon tax policy that considered the endogenous driving forces of the socioeconomic system on Shanxi Province, a typical energy-dependent region in China, as well as the cascading external effects on China's major economic circles. A significant interaction was found between carbon tax policy, production efficiency progress, and emission efficiency progress, confirming advantage of the composite policy in terms of the environmental–economic benefits. In contrast to common stereotypes, the composite climate policy will promote the clean transformation of the energy structure and gross domestic product growth, and water scarcity in Shanxi Province will be alleviated under the energy–water nexus mechanism. Relying on complex cross-regional networks, China's economic inequality will be indirectly eased. The economic driving forces of the Yangtze River, Chengdu-Chongqing economic circles, and Shanxi Province will be strengthened, promoting system stability and sustainability. It is recommended that Shanxi Province implement a moderate carbon tax policy while improving production efficiency; the intensity of emissions technology reform can be flexibly adjusted according to actual needs. This study provides evidence to support the implementation of climate policy, which is of great significance for other similar regions looking to solve the dilemma of sustainable development.