Research on Effects of Carbon Tax on Low-carbon Investment Decision —Based on the Case of Coal Electricity Plant

Abstract

China’s economy has entered “New Normalâ€. Carbon tax will facilitate the deepening of capital, which exerts significant effects on enterprise’s low-carbon investment decision. Based on the case of coal electricity plan, the paper regards carbon tax as a variable in enterprise’s investment decision, adopts NPV (net present value) approach and IRR (internal rate of return) approach to explore into effects of carbon tax on enterprise’s investment decision by the difference between the prospective earnings of enterprise’s investment into energy-saving equipment and investment cost. The study finds that the implementation of carbon tax motivates enterprises to choose low-carbon and energy-saving equipment and brings extra investment earnings for enterprises. Therefore, it proves that carbon tax can effectively facilitate enterprises to execute decision-making on low-carbon investment with the support of government’s relevant finance and taxation incentive policies.