Economists: Tax carbon to cut emissions

Imposing a carbon tax is the best market instrument that China can use to cut greenhouse gas emissions. That's according to two reports issued by the Chinese Economists 50 forum. They say such a tax should be at the heart of any strategy to cut emissions and increase energy efficiency.

Advisor to the central bank, Fan Gang, says a carbon tax will help adjust key economic structures, though it could be costly for businesses in the short term. He's recommending slashing requirements on enterprises, such as social security payment as compensation.

Under the current five-year plan from 2006 to 2010, China has promised to cut energy consumption per unit of GDP by 20 percent. In November, it released plans to cut carbon intensity by 40 to 45 percent from 2005 levels by 2020.