The double dividend of an environmental tax reform in East Asian economies

This chapter estimates the production-based and consumption-based CO₂ emissions including the industrial distribution of emissions for the world's largest economies. There are substantial differences in the distribution of production-based CO₂ emissions between the countries. There are quite large differences between sectoral production-based and consumption-based CO₂ emissions in China, the US, the EU, Japan, and Korea. The absolute levels of production-based CO₂ emissions of all 14 industries are higher than their consumption-based equivalents in China. For example, consumption-based emissions in the textiles and apparel industry are much higher than production-based emissions. For some industries, such as petrochemicals and equipment manufacturing, production-based CO₂ emissions are higher than consumption-based emissions. However, for other industries, such as food processing and transportation, production-based CO₂ emissions are less than the consumption-based emissions. When considering the environmental tax reform policies, it is found that they lead to reductions in both production-based and consumption-based emissions in all countries.