Economic impacts of environmental cost internalization of coal in China

Based on the estimation of value of external environmental cost of coal in its whole life cycle including production, transportation and usage, this study applied GREAT-E model to quantify the impact of the environmental cost internalization policy of coal, including gross domestic products (GDP), residents' income, industrial structure and trade competitiveness. Results showed that the impact of environmental cost internalization for each stage (including production, transportation and usage) to Chinese macro economy was relatively limited, and negative impacts on GDP was acceptable. Even if all environmental costs in the process of coal production, transportation and consumption were internalized, real GDP loss was only 0.15%. The environmental cost internalization of coal was beneficial to optimize the industrial structure and trade structure. High energy-consuming industries would be restrained, and the developments of technology-intensive and modern service industries are accelerated. This was because labor and capital released by high energy-consuming industries are transfer into the technology-intensive and modern service industries. Levy on coal in the process of coal production, transportation and consumption could directly stimulate industries to implement more proper measures to reduce environmental pollution and ecological degradation. © 2018, Editorial Board of China Environmental Science. All right reserved.