Intergenerational inequality and its mitigation scheme of carbon pricing policy under China's dual carbon goals

As China advances toward its dual-carbon goals, carbon pricing is recognized as a core policy instrument. However, the intergenerational distribution of its welfare impacts and the underlying mechanisms remain unclear, potentially leading to intergenerational inequity. This study constructs a framework to evaluate the intergenerational effects, including a CGE model that disaggregates the household and labor sectors by age group and a Theil index to quantify inequity. By simulating different carbon pricing policies over the period 2021-2060, we find that intergenerational factors are the primary source of inequality in welfare losses, accounting for more than 90% of the total. Carbon pricing drives intergenerational inequality through both age effects and period effects, with the former indicating greater losses for younger households and the latter indicating heavier burdens on future households. Further, we design an inequality mitigation scheme based on carbon revenue recycling, combining intratemporal redistribution and intertemporal allocation. The simulation using the NDRC scenario demonstrates the effectiveness of our scheme, showing a 49.06% reduction in intergenerational inequality. The findings provide policy insights to alleviate unequal social impacts of carbon reduction and facilitate a just transition.