Distributional employment impacts of the nationwide emission trading scheme in China.

ABSTRACT

When evaluating climate policy, previous researchers tend to exaggerate positive employment benefits at aggregate level. Nevertheless, distributional employment at sectoral level is usually neglected, and consequently policy implementation may be impeded by the sectors with severe employment loss. Hence, distributional employment impacts of climate policy should be comprehensively studied. To achieve this target, in this paper, a Computable General Equilibrium (CGE) model is employed to simulate the Chinese nationwide Emission Trading Scheme (ETS). The CGE model results show that the ETS decreased total labor employment by approximately 3% in 2021, and then this negative impact will diminish to zero in 2024; the ETS will positively affect total labor employment in 2025-2030. The ETS increases labor employment in the electricity sectors and also agriculture, water, heat, and gas production sectors, as these sectors are complementary to the electricity sectors or do not have intensive use of electricity. In contrast, the ETS decreases labor employment in the sectors with intensive use of electricity, including the coal and petrol production, manufacturing, mining, construction, transport, and service sectors. Overall, a climate policy, which covers electricity generation only and is time-invariant, tends to have time-decreasing employment impacts. Because this policy increases labor employment in electricity generation from nonrenewable energy, it cannot help achieve low-carbon transition.