Page 129 - Low Carbon Development in China and India
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mechanism between the Central and local governments in the field of
green/low carbon expenditure.
In contrast to the central payment model, the earmarking style of the
transfer payment generally refers to a management model under which
the revenue from a particular tax or fee is subject to special management
and is used to corresponding areas in its entirety. Take the revenue
from the energy or carbon tax for instance. Some developed countries
have put the revenue under independent management and used the
total of such revenue directly for the development and maintenance
purposes in the clean energy and low carbon growth areas. Earmarking
is beneficial not only for the maximization of the dividend of the
transfer payment, but also important for the double dividend effect in
the environmental protection area, which is to promote—green/low
carbon—economic development and employment while protecting
the environment. At present, the earmarking style of the fiscal
management mechanism is not widely applied in China. However, we
can transfer part of the fiscal revenue to the sectors where low carbon
growth is more likely to happen by establishing special low carbon
financing funds at the local level or setting up projects which support
local low carbon financing under the existing funds (such as the CDM
fund). The low carbon financing in the form of funds will be discussed
later. Finally, the current transfer payment mechanism may consider
giving more compensation to the areas which have suffered structural
economic loss in the short term due to their efforts to develop the
green, low carbon economy. This will stimulate the local governments’
enthusiasm in developing the low carbon economy in cities.
Apart from the transfer payment, direct investment from the
central government can also lighten the investment burden of the local
governments, and in turn, bring about more disposable income to
the local governments, which can be used to promote the low carbon
economy. For this purpose, we need to further clarify the rights and
responsibilities of investors in the environmental protection area,
adjust the investment behaviours of various investors in the low
carbon economic investment area (including the central government,
local governments, and enterprises), and regulate low carbon
investment activities. As Wang Wenxiang6 pointed out, there are many
shortcomings and defects in the method and scope for the division
6 Wang,Wenxiang, ‘Environmental Protection Investment: Too Heavy Burden
for Local Governments, Expenditure of Central Government to be Increased’,
China Economic Herald, 10 May 2012. Available at http://www.ceh.com.cn/ceh/
llpd/2012/5/10/112169.shtm
94 Low Carbon Development in China and India
green/low carbon expenditure.
In contrast to the central payment model, the earmarking style of the
transfer payment generally refers to a management model under which
the revenue from a particular tax or fee is subject to special management
and is used to corresponding areas in its entirety. Take the revenue
from the energy or carbon tax for instance. Some developed countries
have put the revenue under independent management and used the
total of such revenue directly for the development and maintenance
purposes in the clean energy and low carbon growth areas. Earmarking
is beneficial not only for the maximization of the dividend of the
transfer payment, but also important for the double dividend effect in
the environmental protection area, which is to promote—green/low
carbon—economic development and employment while protecting
the environment. At present, the earmarking style of the fiscal
management mechanism is not widely applied in China. However, we
can transfer part of the fiscal revenue to the sectors where low carbon
growth is more likely to happen by establishing special low carbon
financing funds at the local level or setting up projects which support
local low carbon financing under the existing funds (such as the CDM
fund). The low carbon financing in the form of funds will be discussed
later. Finally, the current transfer payment mechanism may consider
giving more compensation to the areas which have suffered structural
economic loss in the short term due to their efforts to develop the
green, low carbon economy. This will stimulate the local governments’
enthusiasm in developing the low carbon economy in cities.
Apart from the transfer payment, direct investment from the
central government can also lighten the investment burden of the local
governments, and in turn, bring about more disposable income to
the local governments, which can be used to promote the low carbon
economy. For this purpose, we need to further clarify the rights and
responsibilities of investors in the environmental protection area,
adjust the investment behaviours of various investors in the low
carbon economic investment area (including the central government,
local governments, and enterprises), and regulate low carbon
investment activities. As Wang Wenxiang6 pointed out, there are many
shortcomings and defects in the method and scope for the division
6 Wang,Wenxiang, ‘Environmental Protection Investment: Too Heavy Burden
for Local Governments, Expenditure of Central Government to be Increased’,
China Economic Herald, 10 May 2012. Available at http://www.ceh.com.cn/ceh/
llpd/2012/5/10/112169.shtm
94 Low Carbon Development in China and India
