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Assessment of a green credit policy aimed at energy-intensive industries in China based on a financial CGE model

Liu, Jing-Yu, Xia, Yan, Fan, Ying, Lin, Shih-Mo, Wu, Jie
Journal of cleaner production 2017 v.163 pp. 293-302
adverse effects, cement, credit, electricity costs, funding, industry, iron, issues and policy, models, paper, steel, taxes, China
A financial computable general equilibrium model is established to quantitatively calculate the systematic effects of a green credit policy. The punitive high-interest rate is applied to the energy-intensive industries as the green credit policy. This study is focused on the following industries: paper, chemical, cement, and iron and steel. Short-, medium- and long-term scenarios are used to conduct experiments representing the green credit policy. Then, a scenario is simulated wherein a green security policy and the green credit policy are carried out simultaneously. Finally, effects of the green credit policy, a differential electricity price policy, and a raised production tax policy towards the energy-intensive industries are compared. The results show that the green credit policy is effective in suppressing the investments in energy-intensive industries, and it is comparatively less effective in adjusting the industrial production structure. The green security policy helps the green credit policy to reduce the total financing of the target industries, but it brings more negative impacts on the economy. Although the policies of differential electricity prices and raising production taxes support the output structural adjustments, their negative effects are much larger than those of the green credit policy.