Will export rebate policy be effective for CO₂ emissions reduction in China? A CEEPA-based analysis

China has adopted cancellation of export tax rebate policies on many occasions to push ahead energy conservation and emission reduction since 2007. By applying a CEEPA (China Energy & Environmental Policy Analysis system) model, this paper simulates the impacts of the cancellation of export rebates on CO₂ emissions and socio-economic consequences in different scenarios so as to figure out whether it works. This paper covers three export rebate scenarios and makes comparisons between the impacts of export rebates on emission reduction effects and that of carbon tax policies. The conclusions are: 1) the current policy which cancels export rebates for key sectors can cut emissions at huge economic cost, yet it is unsustainable; 2) the policy which cancels export rebates for key sectors and meanwhile subsidizes sectoral outputs yields double dividends in the short term, thus can facilitate emission reduction yet the boost is limited; 3) the policy which cancels export rebates and boosts domestic demand helps improving residents' welfare in the short term while it may inflict pronounced social and economic impacts in the long run. So policy of this kind should be adopted with great caution; 4) export rebates generate far more economic costs than carbon tax policies in the long term, and don't contribute to optimizing the energy mix as well as the latter. In summary, canceling export rebates should not be regarded as a priority to encourage emission reduction.