Regional disparities in carbon tax effectiveness: A multi-regional CGE analysis of provincial production and freight emissions in China

A carbon tax is widely recognized as a critical tool for promoting low-carbon transitions, yet its regional disparities in effectiveness have not been extensively studied. This study introduces a multi-regional Computable General Equilibrium (CGE) model with an endogenous freight module, allowing for a detailed representation of domestic trade flows and a comprehensive evaluation of carbon tax impacts on provincial production, trade and emission efficiency. Overall, a carbon tax of 50 CNY/ton is estimated to reduce CO₂ emissions by 652 million tons from production and 12.3 million tons from transportation, resulting in a 4 % decline in the national average carbon intensity. However, the effectiveness of the carbon tax varies significantly across regions. Fossil fuel-dependent provinces, such as Shanxi and Hebei, and regions experiencing an influx of production capacity exhibit limited reductions in production carbon intensity averaging as low as 1 %. Additionally, nearly half of the provinces report increased freight carbon intensity, primarily attributable to a shift toward heavier goods exports and longer shipping distances, with export distances increasing by 0.5 % to 1.5 % across most regions. While a moderate carbon tax rate supports low-carbon transition goals for most provinces, coal-reliant regions and oil-dependent freight sectors may require higher tax rates to achieve deeper decarbonization. These findings highlight the importance of tailored, region-specific policy interventions to address diverse economic and energy profiles.